Fortis subsidiary RIAS's 2009 expense ratio showed a downward trend, but operating profit was less positive
Insurance broker RIAS, which specialises in selling home and motor cover to customers over 50, boosted net profit by 10% and revenue by almost 4% in 2009 despite tough market conditions.
The broker, a subsidiary of insurer Fortis (UK), made a net profit of £17.8m for the year to 31 December 2009, compared with £16m for the previous year. Turnover was £80.6m, up from £77.6m – the first time it has broken the £80m barrier. Total expenses (cost of sales plus administrative expenses) fell slightly from £56.1m to £55.8m.
As a result, the expense ratio – total expenses as a percentage of earned commission income – fell to 69% in 2009 from 72% in 2008 and 76% in 2007, indicating that the company is becoming more efficient. However, the trend in operating profit, which the company considers to be another key performance measure, is less positive. 2009’s operating profit in 2009 increased 10% on the previous year, compared with 15% in 2008 and 39% in 2007.
RIAS’s increased profit comes despite an 82% fall in bank and other interest receivable to £231,000 in 2009 from £1.3m in 2008.
The company’s total liabilities fell from £44.6m in 2008 to £35.5m.
The company attributed this to the fact that it paid insurers upfront from its own funds, reducing the outstanding amounts to be paid.
Shareholders’ equity increased from £18.4m as at 31 December 2008 to £20.2m on the same date of 2009.