Focus on motor risk selection fails to improve RBSI results
Royal Bank of Scotland Insurance (RBSI) chief executive Chris Sullivan has opened the door to a potential sale of the NIG brand, as the company reports a loss of business in its broker division.
Sullivan declined to say if RBSI would still own broker-only insurer NIG this time next year, adding: “As we stand now, I don’t know. We certainly haven’t sold it. I couldn’t give a guarantee about anything in the future because things move so fast.”
The company’s fourth quarter results showed profits before tax of £683m, but reported a loss of business in its broker and partnerships divisions.
Although there was income growth in motor broker business of 6% to £356m, due to average price increases, the number of policies declined by 4.5% to 1.37 million.
Sullivan said the company’s policy of focusing on profitable risk selection in motor partnerships resulted in a fall in income of 9% to £1.07bn, with policy numbers down 12%.
He said: “We have turned away business that is unprofitable and improved our risk-pricing capabilities. People have been chasing volume for volume’s sake.”
At the end of 2007, RBSI underwent a major restructuring in a bid to stop its six brands from competing against one another and instead operate as one company.
In the autumn, RBSI’s personal lines insurer Direct Line launched a commercial product and Sullivan said he would like to see that business grow as much as possible.
The restructuring has led to market speculation that Sullivan may be looking to sell off NIG and focus more heavily on direct lines of business. AIG and MMA have been mooted as potential purchasers by market sources.
The restructuring has seen several senior managers leave the company, but Sullivan said despite the uncertainty, morale has been higher than he anticipated.
He said: “They agree with the direction the company is taking.”