5th Aug 2016 06:41
LONDON (Alliance News) - Insurer esure Group PLC on Friday trimmed its interim dividend, saying it wanted to retain capital in order to fund its growth plans, as pretax profit sank on one-off costs but underlying profit also was marginally lower.
The mid-cap firm, which provides general insurance and owns price comparison service GoCompare, declared a 3.0 pence interim dividend, down from 4.2p a year earlier and below the 3.5p forecast by DividendMax. Esure said it was cutting the dividend in order to fund growth across its divisions.
Pretax profit for the half-year to the end of June was GBP30.7 million, down 69% from GBP97.6 million a year earlier. The 2015 half-year pretax profit had been flattered by a one-off gain booked on the value of esure's holding in GoCompare. Underlying pretax profit, taking out the one-off effects, was essentially flat in the first half, at GBP45.6 million versus GBP46.5 million a year prior.
Gross written premiums rose 16% year-on-year in the first half to GBP320.4 million from GBP275.5 million a year prior. Total in-force policies grew to 2.1 million at the end of June from 2.0 million at the end of 2015.
Premium growth was driven by a strong performance in esure's Motor business, where premiums increased 18%. Home insurance premiums rose 5.9%.
Esure said its combined operating ratio, a measure of how profitable its underwriting is, rose to 99.2% from 95.8%, hit by adverse weather conditions in the first half.
The group said its full-year combined operating ratio will be 98% to 99%, assuming normal weather conditions for the remainder of the year and taking into account the hit taken from weather-related claims in the first half.
Esure said it expects gross written premium growth of 13% to 18% for the full year and for in-force policies to rise by 6% to 9% year-on-year, on the assumption current market conditions continue in the Motor division.
Esure added that, given it is a UK-based business underwriting risks in the UK, the result of the UK's European Union referendum should have only a limited impact on its operations.
"We are well placed for further profitable growth across both businesses in the second half of the year," said Chief Executive Stuart Vann.
By Sam Unsted; [email protected]; @SamUAtAlliance
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