Latest results, led by RBSI and Allianz, show the industry is slowly turning things around. But there is still a way to go

There are plenty of positives messages in the clutch of numbers released by UK general insurers today.

RBSI has turned in four consistent quarters of profit after its horrible performance in 2010, vindicating chief executive Paul Geddes’ frequent assertions during the tough times that things would get better.

RSA has doubled its UK operating profit after returning to underwriting profitability. There are even some signs of improvement at Equity Red Star, with parent company Australian giant IAG’s chief Mike Wilkins declaring that its UK arm was close to breaking even at the half-year point.

Throughout it all, the ever-stoic Allianz has turned in another robust performance with an 11% rise in full year profit and a consistent combined ratio.

There is even good news on the commercial front: Paul Geddes told Insurance Times earlier today that NIG, its broker-only commercial insurer, had returned to profitability in 2011. In addition, RSA revealed that it had put through commercial lines rate increases of 7%, 5% and 4% in motor, liability and property respectively.

Despite the overall air of optimism, there are signs that insurers still have much to do to set things right. Despite the pricing actions, and a return to breakeven overall, two of RSA’s commercial businesses, property and motor, are still firmly in loss-making territory from an underwriting perspective. They both posted 105% combined ratios.

RSA is by no means alone here – all chief executives are continuing to call for higher prices in commercial lines.

There is little sign of respite on the horizon. There is talk of capacity continuing to pour into all areas of the commercial business. SME is an increasingly fierce battleground, and RSA has cut its mid-market regional commercial business by 10% because of heavy competition – largely from newer entrants rather than the big-name stalwarts in this area.

There is also sign of continuing pain on personal lines motor. Following the revelation by AXA that its motor business is still making an underwriting loss, RSA’s motor book is just about breaking even despite 17% rate rises during 2011. In fairness, though, it will take time for these rate rises to show up in RSA’s numbers, so further improvement is clearly on the way.

The overall message so far is: note the progress being made, but don’t celebrate success just yet.
 

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