5th Nov 2014 07:51
LONDON (Alliance News) - esure Group PLC Wednesday warned it expects its combined operating ratio, a measure of underwriting profitability, for the full year to tick up towards 92%, assuming "normal" weather for the rest of the year.
The insurer had previously said it was on track to deliver a full-year combined operating ratio "broadly similar" to the 90.9% reported for the first half of the year. A combined operating ratio of 100% represents a breakeven point, while anything above is a loss and anything below a profit.
"Recent data from the [UK] Ministry of Justice claims portal suggests that claims inflation is starting to re-emerge, driven by an increase in small bodily injury claims frequency. The group continues to set claims reserves on a prudent basis and, therefore, now expects the combined operating ratio for the full year to tick up towards 92%, assuming normal weather for the remainder of the year," esure Chief Executive Stuart Vann said in a statement.
Vann said esure has seen some signs of rate stabilisation in the UK motor market, but added that it would be premature to say whether the developments are due to a turn in the motor rating cycle or because of rating seasonality.
Vann's comments came as esure reported a 4.0% reduction to GBP410.0 million in gross written premiums in the first nine months of the year, citing a 4.5% drop in motor insurance and a 1.3% fall in home insurance. Third-quarter gross written premium fell to GBP149.6 million from GBP161.6 million a year before, with motor down 8.8% and home "broadly" flat.
"The reduction in our gross written premiums is consistent with our guidance, as we continue to focus on underwriting discipline against a backdrop of a competitive rating environment in both motor and home," Vann said.
"Over recent months, we have implemented a number of targeted rate increases in motor, which have resulted in a small reduction in the group's in-force policies in the third quarter compared to the second quarter," Vann said.
According to esure's statement, in-force policies fell to GBP1.95 billion at the end of the third quarter from GBP1.97 billion at the end of the second quarter. However, they have risen from the GBP1.93 billion at the end of esure's last financial year.
By Samuel Agini; [email protected]; @samuelagini
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