Insurer posts record half-year profits of £561m
Norwich Union's (NU) private motor book plunged deeper into the red in the first half of 2006, despite a record half-year performance in which total profits soared to £561m.
Underwriting losses for the private car book increased to £33m from a £14m loss in the first half of 2005, despite an increase in rates of between 2% and 5% in the six months to June.
The motor book's combined ratio for the period deteriorated to 105% from 102%.
NU attributed the performance to a "highly competitive market" but insisted it would continue to increase motor rates in the second half of the year in order to "maintain the profitability of the account".
Simon Machell, chief executive of NU General Insurance, said: "We are prepared to sacrifice volume. We will accelerate rate increases in the second half."
He agreed it was for the large motor insurers like NU to "take the lead" in increasing rates.
Across the general insurance business as a whole, operating profit increased 30% for the six months, buoyed by a strong commercial lines performance.
Net written premiums rose 6% to £2.9bn, while the combined ratio improved four points to 92%.
Direct premiums grew by 5%, including net written premiums of £57m from RAC Direct Insurance. NU said 40% of its direct business was written online.
NU's personal lines book, boosted by a £125m benefit from better than expected weather claims, produced an underwriting result of £64m. The combined ratio improved two points to 97%.
The commercial business produced a combined ratio of 84%, compared to 91% in 2005. Underwriting profit nearly doubled to £169m.
Aviva group chief executive Richard Harvey said: "Our general insurance business has delivered its best combined operating ratio ever, demonstrating again the sustainability of our general insurance results.
"The integration of RAC is complete and we are on track to deliver our cost and revenue targets for this business."
The insurer said it aimed to provide better service to brokers "by streamlining back office processing and improving our trading capability".