esure achieves solid results
esure Group has today announced its result for the year ended 31 December 2014, in which it has achieved ‘solid results through a disciplined approach in a challenging environment’.
In-force policies were up 0.7% to 1.946 million (2013: 1.933 million), as gross written premiums reduced in 2014 to £517.8 million, as the group remained disciplined in its rating actions during the industry’s transition through the soft part of the motor rating cycle.
Profit before tax too decreased 12.8% to £103.3 million (2013: £118.4 million) impacted by current market conditions and costs associated with the acquisition of Gocompare. The acquisition of the outstanding 50% of Gocompare for £95.0 million is expected to complete on 31 March.
The group remained focused and disciplined in its approach to underwriting throughout the year and this resulted in a 3.9% reduction in motor gross written premiums to £429.3 million. In 2014, the continued competitive rating environment in motor was not conducive to profitable growth; however, the group did manage to implement targeted rate increases in motor as it looked to mitigate the impact of claims inflation. Despite the challenging market conditions in 2014, the group achieved a combined operating ratio in motor of 92.4%.
Peter Wood, chairman of esure Group, commented, ‘However, the inherent competitiveness of our market – where many participants are looking to grow or maintain market share – meant our rate increases resulted in a lower level of new business in the second half of the year. As a consequence, in-force policies were broadly flat at the year end compared to 2013, which is a position I am comfortable with, as we get nearer to a potential upturn in the rating cycle.
‘The Group’s segment re-entry programme, where the Group has re-entered segments of the market that it had previously exited, continues to perform well and has provided great insight into further opportunities available to the Group across the wider motor market. A number of additional underwriting initiatives were rolled out on a “test and learn” basis in 2014, as the Group looks to expand its quote footprint over the medium to long term. The performance of these new segments has been encouraging and further initiatives will be rolled out in 2015, as we look to grow outside our core segments.’
‘The UK personal lines insurance markets remained competitive in 2014, with rate reductions characterising both the motor and home markets. Some signs of rating stabilisation did start to appear in the motor market in the latter part of the year, but claims inflation returned during the second half of the year, with market data showing an increase in the frequency of small bodily injury claims.’
Stuart Vann, chief executive officer of esure Group plc, commented, ‘I am pleased that we have received Competition and Markets Authority clearance to proceed with the acquisition of Gocompare. We expect to complete the acquisition on the 31 March 2015. In taking strategic control of Gocompare, we will invest in the business to take advantage of the significant opportunities in the medium term.’
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