RBSI boss: 'NIG on track despite income fall'

Broker-only commercial insurer NIG shared in the success of its parent in the first half, according to RBSI chief executive Paul Geddes.

Geddes said NIG was on track despite a 4% commercial income drop across the group in the first half of the year.

However, he added that while the results are encouraging, the insurance group as a whole still has much work to do before its transformation is complete.

RBS Insurance as a whole posted a £206m operating profit in the first half, a big improvement over the £253m loss it made in the same period last year.

Geddes declined to give precise figures for NIG alone, but said: “NIG business saw good growth and profit in the first half and I am very pleased with how NIG is going.”

He added that NIG’s performance is masked to an extent in the commercial insurance revenue reported today because the income also contains run-off business such as Finsure. Commercial lines income fell 4% to £154m in the first half of 2011 (H1: £160m).

As well as NIG, RBSI includes direct personal lines insurers Direct Line Churchill and Privilege as well as affinity partner UKI.

While Geddes praised RBSI’s turnaround, he added that returning to profitability is only part of the plan. The company also intends to reassert its competitive advantage as one of the UK’s leading personal lines insurers, which in turn it hopes will lead to profitable growth.

“We are pleased with the performance but we’re not declaring victory,” he said. “There is lots more still to do, but we’re encouraged: we’re confident but not complacent.”

RBSI is planning to separate itself from the Royal Bank of Scotland in the second half of 2012 through an initial public offering (IPO) or trade sale – with the favoured option being an IPO. RBS has to divest a majority of its insurance arm by 2013 under the terms of its government bail-out in 2008.