Revenues up in personal lines
The hardening market pushed revenues up at Groupama Insurances in 2008 but profits fell amidst tough market conditions.
Groupama reported revenues of £432.6m, up 6% on the previous year. Pre-tax profits were £18.5m compared to £23.1m.
The insurer said policy count remained static, but the rating environment improved in personal lines during the year with prices rising consistently in personal motor accounts.
Personal lines revenues were £225.2 million (2007: £221.7 million).
Commercial lines and healthcare revenues remained static and under pressure throughout the year as a result of very challenging market conditions, Groupama said.
Total commercial revenues were £108.4 million (2007:£104.7 million) reflecting fierce market conditions for open market SME business.
The rating environment remained poor, especially for new business and there is now an urgent need for market prices to move up, especially given reducing investment returns.
Francois-Xavier Boisseau, chief executive officer at Groupama said: “2008 is our sixth straight year of continuing profitability and in what has been an extraordinary year a return on equity of 13.6% must be regarded as a very acceptable outcome for Groupama Insurances. However, there is work to do to enhance profitability in some areas of our business and this will be a focus in 2009.”
“Although we are seeing some sanity returning to premium rating in the private motor market, this will need to continue throughout 2009 to allow the market to return to positive territory. For our part, we are happy to see our share reduce if necessary to restore the levels of profitability that we expect. However, the commercial lines market and especially that for smaller standard risks, remains extremely challenging and we badly need to see a return to common sense. It is very disappointing that for all the noise in the market about increasing premium rates, it is still not happening – especially for new business.”
“In the second half of the year our results have been affected by what can only be regarded as recession related losses including arson. This is of real concern as the market is still not pricing for this pattern of increasing claims. I think that we can all probably expect things to get worse before they get better.”
“We have taken a very sensible and disciplined approach to our healthcare business over recent years and have concentrated on enhancing the bottom line rather than trying to grow in unfavourable market conditions. Our portfolio is now responding to our efforts and against the background of the first signs from our competitors that prices in the SME sector may be moving up, we are in a better position to compete more effectively.”