But large losses in the insurer’s ATE run-off portfolio push COR northwards
DAS UK has reported a near quadrupling of post-tax profits to £11.3m for the year ending 31 December 2019, up from just £2.3m for the previous year.
More than half of this profit, however, came from the sales of the Republic of Ireland branch and a Bristol office property which, combined, amounted to £5.4m.
And despite this jump in profits, the legal expenses insurer’s combined operating ratio (COR) climbed 3.8 percentage points to 99.2%, with the insurer also reporting an increase in large losses in its after-the-event run-off portfolio.
DAS UK group chief executive Andrew Burke said: “In 2019, we consolidated and strengthened the underlying improvement in performance delivered in 2018 and are pleased with the results.
“The historic large losses in ATE were disappointing but they don’t detract from the strong performance across all our core portfolios.”
The insurer’s solvency position, meanwhile, improved eleven percentage points to 181%, and Burke said he was positive about the insurer’s prospects for the future.
“Continued growth in BTE remains a primary focus and we expect 2020 to be a strong year in that respect,” he said. “Our strategy to grow the business through long-term sustainable partnerships where we share a desire to improve customer outcomes is proving to be a resounding success. We have already won a significant amount of new business in 2020 – including Simply Business – and we have a strong pipeline of further opportunities.
“ATE is likely to be more challenging and, whilst we anticipate improved profitability in 2020, growth is less likely given the current market dynamics.”
When it comes to the impact of Covid-19, however, the impacts are yet to be fully understood.
“In terms of bottom line it is still too early to accurately predict the impact of Covid-19 and subsequent economic challenges, but it is clear they will be material in 2020 and most probably 2021,” Burke said. “Beyond that, I remain very optimistic, in part because the current challenges highlight that protection afforded by legal expense insurance is more relevant than ever.
“We are also part of a strong Group and continue to enjoy the security of a healthy and stable financial position. That combination gives me confidence in our ability to face whatever challenges come our way. The medium- to long-term future looks very bright!”