10th Mar 2015 09:19
LONDON (Alliance News) - Insurers esure Group PLC on Tuesday reported a fall in pretax profit for 2014, blaming motor insurance market conditions and costs related to the acquisition of the remaining parts of GoCompare, as gross written premiums fell and the group cut its final dividend.
The FTSE 250 constituent said its pretax profit for 2014 was GBP103.3 million, down 13% on the GBP118.4 million posted a year earlier due to the challenging conditions in the motor insurance market and due to costs related to the acquisition of the 50% of price comparison service GoCompare that it did not already own.
Gross written premiums ticked down to GBP517.8 million, 3.4% lower than the GBP535.8 million it reported last year, while in-force policies increased by 0.7% to GBP1.95 billion from GBP1.93 billion a year earlier.
The company said it would pay a final dividend of 11.7 pence per share, down from 13.3 pence last year. Its full-year dividend is 16.8 pence, above the 15.8 pence per share posted last year.
"esure's management team continue to make the right decisions to position the business for further profitable growth when market conditions permit. As we wait for those conditions, 2014 has been another year of discipline. The recent acquisition of Gocompare is an exciting opportunity for the group. It provides us with strategic control of a leading UK financial services brand with great potential," said Chairman Peter Wood.
Chief Executive Stuart Vann said that esure has made a "positive start" to 2015, and expects to see "modest growth" in in-force policies and gross written premiums in the first quarter.
However, Vann said the combined ratio, a measure of underwriting profitability which showed an unwelcome increase to 91.9% from 89.7% in 2014, faces continued pressure from claims in 2015. A percentage above 100% represents an underwriting loss, while anything below that threshold represents profitability.
"We expect the combined operating ratio trend in 2014 to continue into 2015 largely reflecting ongoing claims inflation. The group continues to enhance its underwriting and customer platforms and remains well positioned for further growth when market conditions permit," Vann said.
esure shares are down 6.5% at 218.60 pence on Tuesday morning.
By Sam Unsted; [email protected]; @SamUAtAlliance
Update by Samuel Agini; [email protected]; @SamuelAgini
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