Higher than expected household claims reduced L&G’s general insurance profits
Escape of water claims caused Legal & General’s general insurance operating profit to slump by 29% to 337m in 2017, the insurer said.
Overall, L&G’s group pretax profit rose 32% to £2.1bn.
The fall in general insurance profit was primarily due to higher than expected non-weather related household claims in the first quarter of last year, “predominantly escape of water”, which the company said was in line with wider market experience.
|Legal & General: General Insurance||2017||2016|
It added that the division’s financial performance improved through the remainder of the year, with action on pricing, underwriting and claims management resulting in a 3 point Improvement in the combined operating ratio in the second half, as compared with the first half.
“As a result, we have seen claims experience returning to the required levels,” the company said.
“We anticipate the actions we have taken to address adverse non-weather related household claims experience in 2017 will drive an improved 2018 performance, more in line with previous years,” it said.
“In General Insurance, we continue to attract significant interest from potential distribution partners, and are actively discussing a number of new opportunities including the very latest in Insurtech,” the company said.
Gross premiums increased 13% to £369m (2016: £326m) “despite the pressures of a competitive market and maintaining our pricing discipline”, it said.
Direct business delivered gross premiums of £139m in 2017, representing 15% growth on 2016 and now accounts for 38% of gross premiums (2016: £121m, 37% of gross premiums).
The company said it is ranked second for household new business via price comparison websites, which in total accounts for over half of UK direct household gross premiums.
The launch of SmartQuote speedy quote process in August has generated “significant interest” amongst potential partners leading to securing one deal with several others at advanced stages of discussion, the company said, adding that, since the launch of SmartQuote, direct take up has increased by more than 50%.