UK insurers made first underwriting profit since 2006 – Moody's

UK general insurers made an underwriting profit for the first time since 2006, according to analysis of PRA returns by Moody’s.

Moody’s Investors Services found a 3% drop in top lines during 2013. Underwriting profit improved, however, thanks to insurers’ restructuring, cost cutting and claims efficiency programmes.

The improvement came despite record rate reductions in person motor and home lines, which acount for 43% of the UK property/casualty market gross written premiums.

Moody’s associate analyst Helena Pavicic said: “Although tough pricing conditions and declining reserve releases will exert pressure on underwriting profitability, insurers will likely pursue further cost reductions and enhance their underwriting capabilities to maintain profitability over the next 12 to 18 months.”

Moody’s predicted that the improving UK economy would stimulate growth for insurers, but warned that low interest rates would continue to suppress profits.