Lloyds GI profit up 1% on lower claims

Lloyds Banking Group’s general insurance profit for 2010 rose 1% despite winter freeze claims and the company’s exit from payment protection insurance (PPI) last July.

The GI division made a profit before tax of £372m for the full year of 2010 (2009: £367m) and posted a combined ratio of 79% (2009: 83%). The improvement came despite the fact that winter freeze claims and the PPI exit cut underwriting income, excluding commissions receivable and payable, to £1.47bn from £1,64bn, and net operating income to £1.12bn from £1.27bn.

The better result was driven in part by a 15% reduction in claims paid to £542m, which the company attributed to lower unemployment claims experience. The company said its home insurance book was affected by the freeze events of January and December 2010 but this was partly offset by continuing claims processing improvements and integration.

The Lloyds GI unit also saw a 21% reduction in operating costs to £208m, which it attributed to alignment of commission arrangements in home insurance, integration savings and a continued focus on cost management.

Lloyds Banking GI highlights for 2010 in £m (compared with 2009):

• Net operating income: 1,122 (1,266)
• Claims paid: 542 (637)
• Operating expenses: 208 (262)
• Profit before tax: 372 (367)
• Combined ratio: 79% (83%)