SME sales double that of previous year
Lloyds TSB Insurance saw its 2007 pre-tax profits slashed by nearly 50% on the back of last January’s storms and the summer floods.
Pre-tax profit for the division was £128 million, down from £243 million in 2006.
The cost of the January storms was £12m from the January storms, while the June and July flooding events cost £101m.
Taking into account adjustments for the extreme weather-related claims, the underlying claims ratio improved in 2007, reflecting both improvements made to home insurance underwriting and the results of recent investments in improving claims process efficiencies.
But claims arising from these extreme events contributed to a rise in the claims ratio for all underwritten lines of business to 49 per cent from 32 per cent in 2006, while the combined ratio increased to 93 per cent up from 80 per cent in 2006.
Against this backdrop, the insurer said it continued to demonstrate robust sales growth throughout the UK retail bank network, reporting an 8 per cent increase in total new business gross written premiums (GWP) and a 14 per cent increase in home insurance new business GWP.
Phil Loney, managing director of Lloyds TSB Insurance, said: “Our focus on providing an excellent service to customers is also helping to drive strong sales of home insurance through our branch network as customers recognise the importance of good quality cover.”
Lloyds TSB also reported substantial growth in SME insurance sales, with gross written premiums rising 99% compared to 2006. This it said was driven by sustained focus on sales through the bank’s Wholesale & Investment Banking division (W&IB), and the acquisition of the SME commercial business from Pearl.
The bank also said it would continue to focus on growing sales through the corporate partnership market in 2008.
The insurer has recently signed a partnership with Resolution, in addition to those completed in 2007, with Assurant Solutions Intermediary and UInsure.
Loney said: “In 2008 we will continue to focus our activity on developing new insurance propositions for the different personal and commercial customer segments within the Lloyds TSB customer base. We also expect to further expand our corporate partnerships business as our ability to work with partners to build new insurance revenue streams is proving popular in the market.
“On the supply side of our business, we remain focussed on leveraging further benefits from the substantial investment we have made in new claims and pricing technology over the last three years, and on ensuring that we control the right parts of the value chain for our broked business.”