I was interested to read your leader )1 April, Insurance Times) but was also, perhaps, a little concerned by some of what was implied.

Can I just be clear and say that Groupama has no intention of 'piling into the UK commercial market', as you suggest?

Firstly, with a commercial account of well over £85m, we have always been a significant player, and secondly, it is never our intention to 'pile' into anything.

We have a clear, long term business strategy that is based around generating profit ahead of revenue and indeed, if you look at our results for 2003, you will see that we have been quite prepared to shed business in favour of protecting and improving our bottom line.

Of course, it is very true to say that we are keen to expand our activities at the smaller end of the commercial market - but certainly not at any price, and if we cannot get the right rate for a risk, then we will be more than ready to walk away.

Our underwriters and actuaries have spent a considerable amount of time and effort developing a sophisticated rating and underwriting approach geared entirely around our desire to generate consistent profitability. This is so we can deliver the return on capital that our parent rightly expects. With this in mind, you will understand that the only growth that we are interested in will be both cautious and profitable.

I was interested that you have formed the view that the commercial market is 'softening'. We do need to be careful with a message of this nature as there is always a tendency for people to believe everything that finds its way into print! Certainly, there will always be maverick underwriters, but in general terms we have been encouraged by the way in which the market has held its nerve.

Our own experience is that we are continuing to get reasonable rate increases on the liability elements of our account, while strong competition is ensuring that property rates remain pretty flat. This is not to say that there will not be 'rogue' individual cases in the market that might cause brokers concern, but this has always been the situation, wherever we happen to be in the cycle.

I do think though, that we are presently in a situation where it is "a good time for good brokers" and it is inevitable that these intermediaries will always work hard to do the best for their clients.

But "one swallow does not make a summer" and we continue to be hopeful that the market remains keen to retain its discipline.

Certainly, we are not alone in taking a professional and robust approach to rating and risk selection - something that remains imperative if underwriters are not to slip back into the bad habits that cost them so dear.

The industry lost its shirt (together with its trousers and most of its underwear) over the last few years by inadequately pricing liability business and trying to "cross subsidise" rates to attract the property business that it prefers.

Frankly, I was beginning to believe that the market had - at last - learned its lesson. I only hope that I am right.

François-Xavier Boisseau
Managing director
Groupama Insurances

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