The insurer’s chief executive believes ‘average just isn’t good enough’

Following the launch of its new long-term organisational strategy last March, personal lines focused insurer Ageas UK has not been afraid to take “decisive action” in order “to do exactly what we intend to do” around its refreshed priorities – including selling the renewal rights of its commercial business to Axa UK and Ireland in February 2022.

Spearheaded by chief executive Ant Middle after he was appointed to the top spot in June 2020, Ageas UK’s four-year strategy saw the insurer pivot to centre its business solely around broker and electronically traded personal lines products.

Therefore, selling its commercial insurance arm “simply enables us to do exactly what we intend to do, which is to focus all of our time, effort and investment on growing our personal lines business”, Middle said.

Speaking exclusively to Insurance Times following the publication of Ageas UK’s 2021 year-end results on 23 February 2022, Middle explained: “When I talked through the strategy last year, I was very clear that we wanted to enable our business to focus all of our time, all of our efforts on developing in our personal lines business.

“Average performance in the UK insurance sector is relatively poor. If you look at average combined operating ratios over time, they vary between 97% and 100% - and average just isn’t good enough.

“We have an aspiration to be operating our business at or below a 95% combined operating ratio by the end of this strategic horizon, on an ongoing, structural basis, and we want to make sure that where we do deploy our capital, our time, our effort and our investment, we can build market-leading positions and be able to compete in the top quartile of any market, delivering top quartile results.”

For Middle, this means “being very, very clear in terms of where we want to spend our time and that’s very much in our heartland of personal lines”.

So, despite being “very proud” of its commercial arm, it was “simply a strategic choice” to sell the business.

“We obviously are proud of the other dimensions of our business that we’ve built over time, but we’ve had to make some clear choices to enable us to achieve what we want to do in personal lines - that means enabling the business to be able to focus wholly and solely on that part of the business,” Middle continued.

“It’s simply a strategic choice to enable us to be as successful as we possibly can be in the part of the business where we feel we can genuinely succeed and outperform the market.

“When we announced the strategy, I’ve certainly said [that Ageas UK] would turn every stone to maximise the value of the remainder of our business and we’ve been taking decisive action to back the strategy.”

Benefiting from a ‘sharp focus’

As Ageas UK approaches the one-year milestone after the launch of its personal lines-centric strategy, Middle confirmed that he is “really pleased with the progress that we are making”.

The firm won the Personal Lines Insurer of the Year accolade at the 2021 Insurance Times Awards last December, for example.

Middle noted that Ageas UK’s “very sharp focus” on “making sure that we focus our time, our efforts and our investment on developing the long-term success of our personal lines business in the intermediated space” is “certainly reaping some very positive, early reward”.

He continued: “We’re reporting a strong combined operating ratio, particularly within those heartland personal lines of motor and home insurance. And income has proven to be very resilient – that is despite lower average premiums in the private motor market that we all saw last year. We certainly weren’t immune to that. Despite that, I think income held up very well through 2021.

“I’d summarise overall 2021 as a really encouraging year of progress for Ageas in the UK.”

Pandemic ramifications remain

Ageas UK reported a combined operating ratio (COR) of 98.4% in its home book for 2021 (2020: 99.4%), while its motor COR was 93.6%, versus 91.1% in 2020.

Gross written premium (GWP), meanwhile, improved within the insurer’s home insurance line – increasing from £302.6m in 2020 to £324.6m last year. However, its motor GWP fell between 2020 and 2021, moving from £743.8m to £676.5m.

Explaining this result within Ageas UK’s motor book, Middle said: “The average or the total top line is very much impacted by the general reductions in average premiums in private motor through 2021 that the whole market saw. I think the market saw between 8% and 10% reductions in average premiums through 2021.

“We remained incredibly diligent in terms of our underwriting discipline through 2021 and we did reflect the reductions that we were seeing in terms of claims frequency in our customer pricing. Hence on average, price has decreased, but our total portfolio number has increased.”

In turn, “home performance is slightly more stable”, Middle continued.

“Really pleased to have grown within our home lines of business. Profitability is broadly stable and the dynamics in terms of consumer behaviour [and] claims patterns were pretty common between 2020 and 2021.”

Digitalisation agenda

Looking ahead to 2022 and beyond, Middle said Ageas UK “will continue to invest in the core fundamentals of our business – both our technical capabilities and our technology capabilities – with our digital transformation programme at the heart of our next steps of our development”.

This includes the insurer’s new partnership with digital insurance platform provider EIS, agreed in February 2022.

Describing the deal as the “most significant infrastructure investment we’ve ever made in the UK business”, Middle explained: “We have appointed EIS to be our new provider of our core technology, which will replace our old technology.

“[This] will really help us to take steps forward in terms of enabling greater pricing sophistication, the digitisation of our business and a far quicker speed to market in terms of our product propositions.”

Ageas UK’s digitalisation journey also involves tapping into cloud computing services firm Amazon Web Services; the insurer will also launch “a new real-time pricing system” in conjunction with Willis Towers Watson later this year.

“All that adds up to a really exciting time for us,” Middle said. “We’re really pleased with our progress and really looking forward to what the next year will bring.”