Insurer sacrificed top-line growth for profitability

Legal & General (L&G) suffered an 8% drop in premium following a rise in rates. L&G’s premium income dropped to £273m last year, compared with £295m in 2008.

Managing director Peter Graham said L&G increased home insurance rates around 5%-6%, sacrificing top-line growth for profitability.

Graham said: “It’s one of our core strategies to grow profitably. Now, anyone can grow unprofitably. But we’ve got to keep the balancing act between writing business at rates that we believe are profitable, and at the same time growing the business.

“2009 was more about some action: a bit of remedial action, looking at profit rather than top-line growth. Now that we’ve got ourselves on a much better footing around those sort of principles, this year we are trying to grow the business a bit more.”

Graham said plans for a motor distribution business were well-advanced, and expected to be up and running in the second quarter.

He said: “We’re not far from appointing our chosen provider. We’re looking for a fairly modest start really, driven by the fact that we have existing business partners asking us to write a motor solution and, not being an underwriter at the moment, we’re not able to provide that.”