Non-life combined ratio deteriorates but solvency improves at French insurer
Embattled French insurance group Groupama made a net loss of €87m (£68.5m), compared with a profit of €151m in last year’s first half.
The company was hit by €204m of exceptional restructuring charges during the half. The amount includes income from discontinued business entities that the company is selling, and exceptional goodwill impairment.
Without the restructuring costs, Groupama would have made a profit of €117m.
Sale progress
Groupama has sold or is in the process of selling several of its units to bolster its capital base, which has been weakened by the eurozone sovereign debt crisis.
On 8 June, Groupama agreed to sell the non-life part of its Gan Eurocourtage business, excluding transport, to Allianz France and Gan Eurocourtage’s marine portfolio to Helvetia on 16 July.
On 19 June it agreed to sell Spanish businesses Groupama Seguros y Reaseguros and ClickSeguros to Grupo Catalana Occidente and INOCSA. And on 23 July it agreed to sell its Polish business, Proama, to Generali PPF Holding.
The deals are expecte top close in the fourth quarter of this year.
The company is in the process of selling its UK assets, which include insurer Groupama Insurances and brokers, Bollington, Lark and Carole Nash. The company gave no update on the UK sale in its results.
Weather losses
Groupama’s non-life business reported a combined ratio of 103.8% in the first half of 2012 (H1 2011: 103.7%). The company said non-life results had been hit by “atypical climatic events” which included frost at the start of the year, and wind- and rainstorms in the spring. “The mid-year ratio is seldom representative of the year-end ratio,” the company added.
Solvency improvement
Groupama also reported an improved solvency margin of 113% at the end of June (end of December 2011: 107%.) Shareholders’ equity increased 9.7% to €5.8bn (end of December 2011: €5.3bn).
The company said it had overhauled its investment portfolio to reduce its sensitivity to the financial crisis. It sold €1.6bn-worth of equities, cutting the equity portion of its portfolio by 25% to 9.9% of total investments (end of December: 12.8%).
The group also eliminated its exposure to Greek sovereign debt.
Groupama deputy chief executive Christian Collin said: “Our half-year results bear witness to the major work accomplished over the last few months, allowing the group to post substantially improved results, close to breaking even.
“As previously announced, the group concentrated on the disposal of certain business assets, on reducing its exposure to financial risk and lowering operating costs. Added to this, client loyalty remained steady and we increased our market share in France.”
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