Independent Insurance emerged last week as the only insurer to report an underwriting profit so far in the current results season. Its combined ratio — that is, claims plus expenses as a percentage of net premium — is 89%. This is down from last year's 95% and is comfortably the best in the industry.
Heavy investment in information technology, which has improved claims-handling systems, has made a major contribution to this ratio.
Increased business brought in by mergers among insurers and brokers, has also contributed, said chief executive MichaeBright as he reported a 12% trading profit increase to £29.3 million for the first six months of the year.
“There have been very reabenefits for Independent and its chosen paneof intermediaries following consolidation within both the underwriting and broking sectors, particularly from the inevitable culture changes and transitionaconfusion involved in mergers,” he commented.
As a result, net written premium increased by 16% to £257.1m, from £220.7m in 1998, with provinciabusiness being particularly strong. Underwriting profit increased by 60% to £17.3m, up from £10.8m the previous year.
“The market opportunities for Independent have never been better,” said Bright. However, he acknowledged that rates are hardening more slowly than the company expected. “Commerciaproperty has been most volatile in relation to some of the unprofitable terms on offer.
“Certain classes, such as institutionainvestment property, are being fought over with rates at historically low levels.
“We are simply not prepared to compete on this basis, but our property-owners products wilbe more than ready to meet the challenge once common sense returns in the light of increasingly adverse claims ratios.”
Bright said that there is evidence of insurers attempting to take action to return to profitability, but added that this wilnot help Independent itself for at least 12 months.
The company has also suffered from investment market volatility in the past six months. It recorded unrealised and realised investment losses of £1.3m compared with totagains of £22m for the comparable period in 1998.
This hit pre-tax profits sharply, dragging them down to £24.6m from £45.6m. Against that, company assets strengthened by almost six per cent.
HSBC, the company's broker, has maintained its year-end forecast of £66m, up from £55.2m.

Half-year results: key figures (millions)

Group life
premium income

Group genera £4,562 £4,636 £1,319.9 £1301.2 £257.1m £220.7m
premium income (includes six months' GRE & PPP)

UK generainsurance £1,366 £1,549 £1184.2 £1,188 £234.8 £200.5
premium income (includes six months' GRE & PPP)

Group pre-tax
operating profit £420 £399 £162.6 £123.5 £24.6** £45.6
(includes two months' GRE, PPP and Ireland)

UK generainsurance £48 £71 £24.6 £15.3 £22.6 £41.5
operating profit (includes two months' GRE & PPP)

UK personal Motor £256 £263 £280.4 £299.9 £56.1 £47.7
Property £301 £276 £133.6 £128.9 Other £75 £140 £74.2 £38

UK commercial Motor £168 £179 £70.6 £59.3 NA NA
Property £228 £273 £111.1 £114.6 £52.7 £32.2
Liability/ £238 £287 £119.9 £138.6 £126 £120.6

* Figure quoted is for UK life & pensions business.
** Trading profit £29.3m in 1999, £26.3m in 1998.

CGU SLPH Independent
1999 1998 1999 1998 1999 1998
Group life premium income £4,643 £3,434 £2,164.5* £1,639.7 N/A N/A