Insurance business triples profits as broking operation remains flat
Groupama boosted its UK business profits by 84% to record levels during 2011, driven by a strong performance in personal lines.
The insurer combined UK operations pre-tax profits climbed to £43.5m last year from £23.7m in 2010.
Groupama Insurances almost tripled its profits to £32.3m from £11.9m a year earlier.
The company delivered a particularly strong performance from the personal lines division as it continued to diversify into non-standard lines and benefited from both benign weather conditions and a positive rating environment in the private car sector.
But profitability in Groupama’s commercial lines division remained under pressure due to fierce market competition for SME insurance, especially for new business.
Groupama’s UK broking operations produced another resilient year with profits before tax remaining relatively flat at £11.2m (2010: £11.8m) against a background of very challenging economic indicators and the £1m cost of restructuring of its ChoiceQuote subsidiary early in 2011.
Bollington, Carole Nash & Lark are among the main brokers in the Groupama group.
The EBITDA margin remained stable at 24.5%.
Groupama chief executive François-Xavier Boisseau said: “2011 was a terrific year for our business in what was a very competitive environment. We are now really beginning to reap the rewards for all our hard work over the past three years.
“We are positioned very positively, not only because of our development as a specialist and non-standard insurer but also because of our commitment to constant innovation in terms of building industry leading e-trading solutions.
“Our broking businesses have also been very resilient over the year and made a valuable contribution. I am absolutely delighted by our performance.”
Total revenues at Groupama Insurances declined slightly to £455.8m (2010: £470.9m), mainly as the result of underwriting action to correct profitability in the commercial motor account and inadequate rating strength in UK commercial lines.
In personal lines revenues dipped marginally to £284.1m (2010: £289m) as the company retained a robust approach to pricing in its home insurance account.
By the end of 2011, almost 40% of the personal lines portfolio consisted of non–standard risks as the company continued to move into more specialist areas.
The company’s motorcycle business grew almost 20% over the year as Groupama stepped up its efforts to become the UK’s number one bike insurer.
Commercial lines revenues declined by 6% to £124.2m (2010: £131.8 million) as the company continued to focus on bottom line profitability in the face of stiff competition.
Groupama Insurances ended the year with a strong solvency margin of 201%, while its investment portfolio consists of 97% gilts or corporate bonds with no exposure to eurozone investments.
Groupama, meanwhile, expects to close the sale of Groupama Healthcare to Simplyhealth next month.
Combined revenues in the Group’s broking businesses remained relatively constant at £59.1m (2010: £60.5m) as the UK’s economic and business environment continued to remain challenging. EBITDA margin was 24.5%.
The insurer put its UK arm and broking subsidiaries up for sale last month after being hit hard by the eurozone debt crisis.
But Boisseau said that despite the ongoing sale process the company still enjoyed a good relationship with partner brokers.
“It is one thing to talk about ‘business as usual’ and another thing altogether to deliver it,” he said.
“However, the year has started really positively. We remain very much open for business and I am very grateful that the UK broking community recognises this and is continuing to support us.”
He also commended Government’s plans to clamp down on the UK’s compensation culture.
“We have been campaigning for the banning of referral fees and highlighting the country’s whiplash epidemic for some years now and it is encouraging that we are finally beginning to see some real progress to address these issues,” he said.
|Groupama UK (combined operations)
|GUK Broking Services
|Solvency margin (at 31/12)*