Profits jump at Esure despite home underwriting loss
Esure made a profit before tax of £45.1m in the first half of 2017, up 44.6% on the £31.2m it made in the first half of last year.
The direct insurer’s combined operating ratio (COR) improved by 2.6 percentage points to 96.6% (H1 2016: 99.2%). This was thanks to a 2.6 point improvement in the motor COR to 95.3% (H1 2016: 97.9%).
The profits jump came despite a continued underwriting loss in its home business, which is far smaller than the home book.
The home (COR) came in at 104.9%, although this was better than the 105.5% reported in the first half of 2016. Esure blamed the home result on soft pricing in combination with inflation in escape of water claims, which is also affecting many of its peers.
Gross written premiums (GWP) were up 22.8% to £393.3m (H1 2016: £320.4m). This was also down to the motor book, where GWP grew 27% to £351.3m (H1 2016: £275.7m).
Esure continued to shrink its home book in response to the soft pricing, with GWP falling 6% to £42m (H1 2016: £44.7m).
The company also announced that it had seen a 33% rate increase in its motor reinsurance bill at 1 July, which is lower than the 100% rate rises the market is expecting as a result of the cut in the Ogden discount rate.
The company hailed the results as “an excellent first half”.
Esure chairman Peter Wood said: “Esure has performed very well in the first half of the year as the management team continues to drive the group’s profitable growth strategy.”
Chief executive Stuart Vann added: “I am delighted with our performance in the first half of 2017. We have delivered strong growth in premiums, policies and profits as the success and momentum of our footprint expansion programme and disciplined underwriting continues to drive the business forward.”