‘Long way to go’ for Ageas despite £34.5m profit hike

There is still much work to be done at Ageas UK despite an impressive first-half performance, according to chief executive Barry Smith.

The insurance group’s profit before tax jumped four-fold to £34.5m in the first half of 2011, from £8.4m in the same period last year. The company also recorded a 3.5 percentage point improvement in combined ratio, to 101.2% in the first half of 2011 from 106.5% in the comparable 2010 period.

A particular highlight was the 12.1 point drop in Ageas’s motor combined ratio, to a profitable 96.9% from a loss-making 109%.

“We still have a long way to go in terms of our objectives for this year,” Smith said. “Plainly the second half of this year is going to be as significant as the first.”

Outstanding tasks include completing the transfer of the Tesco Underwriting joint venture, to continue expanding distribution arrangements for non-life and protection products, and completing the integration of Castle Cover and Kwik-Fit into the retail broking division.

A further objective is to continue improving the company’s technical risk analysis. “Yes, we need to have a market profile, yes we need to deliver on service, but the technical capabilities in terms of how we look at risk as well as how we make sure we are maintaining the quality of our earnings is also critical,” he said.

Also on Smith’s to-do list is further growth in Ageas’s commercial lines book. Ageas grew its commercial gross written premium by 32.5% to £106.3m from £80.2m. He admits this will be tough, however, given soft commercial rates.

“From a strategic viewpoint, there is no doubt at all about our commitment to increase our presence in the commercial market,” he said. “The question as ever is: how do you go about that, especially at a time when margins in the commercial market are quite thin?”