Commercial insurer swings to £47.3m profit from £78.8m loss

NIG made a profit after tax of £47.3m in 2011, compared with a loss of £78.8m in 2010, according to a Companies House filing.

The company, the brokered commercial lines subsidiary of Direct Line Group, improved its combined ratio to 103% in 2011 from 122% in 2010.

The filing confirms comments made by Direct Line Group chief executive Paul Geddes and NIG managing director Jon Greenwood in February, when the group published its full year results.

The turnaround came despite a 35% drop in gross written premiums to £436.3m (2010: £675.8m).

Net claims dropped 55% to £245.8m (2010: £551m), and the company cut total expenses by 26% to £179.3m (2010: £242.1m). Within this, commission expenses fell 32% to £100m (2010: £148m) and marketing and administration expenses dropped 16% to £79.3m (2010: £94.1m).

The company also enjoyed a 17% boost in net investment income to £34.5m (2010: £29.4m), and a sharp increase in net realised gains on assets to £47.2m (2010: £6.3m).

As with the other underwriting entities of the Direct Line Group, NIG transferred its assets and liabilities into sister company UK Insurance on 10 December 2011, and ceased underwriting business. The move was made to prepare for Solvency II.

Direct Line Group, formerly RBS Insurance, is currently owned by the Royal Bank of Scotland, but will split from its parent in the second half of this year, most likely through an initial public offering.

NIG 2011 results in £m (compared with 2010)

  • Insurance premium revenue: 436.3 (675.8)
  • Net insurance claims: 245.8 (551)
  • Result before tax: +62.7 (-113.1)
  • Result after tax: +47.3 (-78.8)
  • Combined ratio: 103% (122%)

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