Continued strong growth in net profit

  • Net profit up 17.3% to GBP 49.1 million  (HY1 2012: GBP 41.9 million)
  • Overall combined ratio at 98.5% (HY1 2012 98.8%)

Total income up in increasingly competitive market  

  • Total income up 2.9% to GBP 1,073.2 million (HY1 2012: GBP 1,043.0 million)
  • Non-Life Gross Written Premiums (GWP) up 3.3% at GBP 936.5 million  
  • Total inflows from Retail businesses down 11.6% at GBP 93.0 million
  • Protection GWP up 38.5% to GBP 43.7 million  

Good progress on Groupama integration 

  • Integration programme to merge Groupama Insurances into Ageas is on track and progressing well
  • Wider range of products now available to more brokers

Well capitalised business  

  • Strong capital positions maintained in Ageas Insurance, Groupama Insurances, Ageas Protect and Tesco Underwriting

Announcing the 2013 half year results, Andy Watson, Chief Executive of Ageas UK commented:

“The positive trend in profit and overall improving performance in our combined ratio has continued to half year and underlines that Ageas remains in good shape.  The Motor market, where prices are reducing, is competitive and challenging but our focus is on profitable growth and we will continue to adopt a disciplined approach.  The integration of Groupama into Ageas Insurance is going well and we expect to complete the legal and regulatory process by the end of the year.  Through the complementary offerings of Groupama and Ageas, brokers now have a wider range of products to choose from and they remain strongly supportive of us which we would like to thank them for.” 

Business Results 

Ageas UK 

Ageas UK continues to focus on delivering profitable returns, reflecting a clear and consistent multi-distribution strategy and partnership approach with brokers, affinities, Independent Financial Advisers (IFAs), intermediaries and through our own Retail businesses.  The combination of high quality service and low cost delivery remains a key area of focus for all the Ageas UK businesses.
The company has delivered an increase in overall net profit, up 17.3% to GBP 49.1 million (GBP 41.9 million HY1 2012).  This reflects a continuing desire to maintain pricing discipline, particularly in Motor; a prudent approach to protecting against volatile weather events, coupled with a decrease in their impact; and the inclusion of Groupama Insurances. 
Income was up at GBP 1,073.2 million (HY1 2012 GBP 1,043.0 million) with the inclusion of Groupama Insurances offsetting a tough trading environment, particularly in Motor where premiums are falling across the market. 
The combined ratio improved to 98.5% (vs. 98.8%) mainly driven by an excellent performance in Household thanks to improved claims ratios in both quarters.  Similarly, Motor has seen a slight improvement in loss ratio but a deterioration of combined ratio.  This is due to a focus on writing a more profitable mix of business, impacting the expense ratio as premiums have reduced and commissions increased, together with the increase in delegated schemes through the acquisition of Groupama.
Ageas’s award-winning track record continued during the period, being awarded The Protection Review Award for Underwriting and LifeSearch Award for Best E-commerce Provider for Ageas’s Protection business. In terms of service, Ageas achieved the Institute of Customer Services ‘World Class’ ServeMark accreditation for Ageas’s Household service proposition; Barker Brooks’ Claims Innovation Client Care Award; POST’s Claims Customer Care Award; the UK Claims Excellence Motor Initiative of the Year award as well as the Outstanding Individual of the Year award; and being voted by brokers for the Best Personal Lines Underwriting Service in the most recent Insurance Age Sentiments survey. Ageas has also been shortlisted for a number of forthcoming awards including the Young Investigator of the Year and Technology Initiative of the Year for the Insurance Fraud Awards, the Bodyshop Insurer of the Year and the Insurance Times Tech Customer Care Award.


Ageas Insurance

Ageas Insurance’s focus has continued to be on expanding profitable business. Net Profit for Ageas Insurance was GBP 34.1 million, an increase of 16.6% on the same period last year (HY1 2012: GBP 29.2 million).
Total Gross Written Premiums (GWP) during 2013 decreased by 6.8% over the same period in 2012 to GBP 549.0 million (HY1 2012 GBP 589.0 million). 
Motor (Private Car and Commercial Vehicle) income was relatively flat at GBP 337.6million (HY1 2012 GBP 340.8million). As market prices are falling in Motor, Ageas Insurance has maintained its pricing discipline to protect future profit flows. Household income decreased by 6.8% to GBP 131.9 million (HY1 2012 GBP 141.6 million) mainly due to the maintenance of pricing for severe weather which has seen positive results in the combined ratio. The Travel account also reduced by 12.7% to GBP 21.6 million (HY1 2012 GBP 24.8 million) along with a reduction in Commercial and Special Risks by 29.3% to GBP 57.9 million (HY1 2012 GBP 81.8 million), reflecting a continued focus on profitability.

Groupama Insurances

The business has contributed GBP 166.4 million in GWP and GBP 7.1 million in net profit to the overall half year results.  Groupama adds a wider range of expertise and complementary products for the company’s strong broker base, reinforcing the strategy to increase the breadth and depth of products available to clients.  As a result, the Optima and Exclusively range of products will continue to be available to brokers alongside Ageas’s existing products.  The plan to integrate Groupama Insurances into Ageas is on track and progressing well with the Groupama Insurance Company Limited name in the UK being phased out by the end of the year in line with the acquisition agreement with Groupama SA. 

Tesco Underwriting

Tesco Underwriting, the Motor and Household insurance partnership with Tesco Bank, of which 50.1 per cent is owned by Ageas, generated GWP of GBP 221.1 million during the period (GBP 317.3 million HY1 2012). In a market environment of strong competition in Motor, Tesco Underwriting is focusing both on maintaining pricing discipline through the underwriting cycle and on writing business which improves its risk mix including a strong focus on lower risk Tesco Club Card customers.
Net Profit, after minority interests, was GBP 1.7 million (HY1 2012: GBP 6.5 million) reflecting the impact of reduced Motor average premiums and adverse prior year claims development related to small bodily injury claims.  The introduction of stronger underwriting controls and recent positive indicators of lower current year loss ratio experience, are anticipated to deliver a stronger second half result.

Life Protection:

Ageas Protect continued to grow with total GWP inflow increasing by 38.5% to GBP 43.7 million (HY1 2012 GBP 31.6 million). New Annual Premiums decreased by 7.4% to GBP 15.8 million (HY1 2012 GBP 17.1 million) reflecting a continued subdued market following Gender Pricing and Tax changes at the close of last year and distribution changes brought about following the implementation of the Retail Distribution Review.
The GWP growth continues to reflect the company’s progress in building customer numbers and now protects over 286,000 lives, an increase of 27% over the same period last year.  Growth in the Protection business has been heavily driven by its award-winning approach to underwriting and technology, high levels of service and product innovation. As part of its commitment to offer a wider range of products to intermediaries, the business has launched several products in the first half of the year including the addition of Personal Life of Another cover through its existing YourLife Plan and Low Start products, as well as a new Business Protection product range providing Term Assurance or Critical Illness with Term Assurance for a nominated key person, business loan, shareholder or partnership.
Ageas Protect had a post tax result of GBP (1.3) million compared to GBP (0.0) million for the same period last year in line with expectations, recognising the costs of financing the growth of the business and a competitive market.

Other Insurance Activities:

Within Ageas UK’s Other Insurance activities, the Retail companies delivered an increase in net profit to GBP 14.6 million (HY1 2012: GBP 12.3 million). Ageas Retail consists of RIAS, Castle Cover, Kwik Fit Financial Services (KFFS) and Ageas Insurance Solutions (AIS), all of which strengthen Ageas’s overall distribution and manufacturing mix. Total inflows were down 11.6% to GBP 93.0 million (HY1 2012: 105.1 million) reflecting a tough and highly competitive environment.  The net profit for the total Other Insurance activities increased to GBP 7.5 million (HY1 2012: 6.2 million), including a one-off deferred tax benefit of GBP 2.6 million. In light of the competitive market, actions have been taken to reduce expenses by 9.5% compared to same period last year. 

Ageas UK Results Summary: Table showing Ageas UK first half 2013 financial results summary