COR jumps seven points to 83%
Lloyds Banking Group’s general insurance business made an underlying profit of £178m in 2015, down 35% on the £274m it made in 2014.
The division’s combined operating ratio increased by seven percentage points to 83% (2014: 76%).
The drop in profitability was partly caused by a £58m claims bill for December’s floods and storms.
Lloyds said the profit decline was also caused by the run-off of products that are now closed to new customers, and the impact of becoming the sole underwriter on its home insurance business, which has resulted in a short term reduction from the loss of commission recognised upfront on the business it did not underwrite itself.
The bank said: “The anticipated launch in early 2016 of a more flexible Home product is expected to lead to an improvement in general insurance sales going forward.”
Gross written premium fell 4% to £1.15bn (2014: £1.2bn), which Lloyds said was because of the competitive market environment and the run-off of the closed products.