4th Aug 2014 07:09
LONDON (Alliance News) - esure group PLC Monday said its pretax profit edged up by 0.4% in the first half amid intense competition in the group's motor and home markets, while it complemented an increase in its interim dividend with the declaration of a special dividend.
esure increased its interim dividend to 3.6 pence from 2.5p, and also said it will pay a 1.5p per share special dividend, increasing the total to 5.1p. esure said it is committed to returning excess capital to shareholders and will take into account its capital requirements, prospective premium growth expectations and the need to retain a "prudent margin" for contingencies in making its decision for the final dividend.
In a statement, esure, the owner of the Sheila's Wheels brand, said it made a GBP57.1 million pretax profit in the six months ended June 30, compared with GBP56.9 million in the corresponding period last year. Total income increased by 1.4% to GBP286.2 million, as earned premiums, net of reinsurance, increased to GBP245.5 million from GBP240.2 million. This was despite a fall in gross written premiums to GBP260.4 million from GBP265.4 million and an increase in earned premiums ceded to reinsurers to GBP19.3 million from GBP17.1 million.
esure said that it expects the competitive environment in the UK motor and home markets to continue in the remainder of the year, and therefore expects a reduction in second half gross written premium compared with the corresponding period in 2013 as it focuses on profit over volume.
As part of total income, investment income and instalment interest rose to GBP22.4 million from GBP21.9 million, though fees for additional services fell by GBP1.9 million to GBP18.3 million. Expenses increased to GBP232.6 million from GBP227.6 million due to an increase in claims incurred.
"The first half of 2014 has seen no let up in the competitive rating environment in both the motor and home markets. The group remained disciplined in its approach to rating and volume which has contributed towards our solid performance," Chief Executive Stuart Vann said in a statement.
The CEO said that the increase in esure's combined operating ratio - a measure of underwriting profitability, with anything below 100% representing an underwriting profit and anything above representing an underwriting loss - to 90.9% from 89.6% last year was in line with guidance and came despite harsh weather in the first quarter.
The group said that it is on track to deliver a full-year combined operating ratio, broadly similar to that achieved in the first half of 2014, assuming normal weather for the remainder of the year.
esure shares were early Monday quoted up 0.7% at 259.00p.
By Samuel Agini; [email protected]; @samuelagini
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