Executive Summary

Continued growth in net profit

  • Net profit up 5.6% to GBP 73.7 million  (9M 2012: GBP 69.8 million)
  • Overall combined ratio at 98.2% (9M 2012 98.6%)

Total income up in increasingly competitive market

  • Total income up 6.0% to GBP 1,627.2 million (9M 2012: GBP 1,535.9 million)
  • Non-Life Gross Written Premiums (GWP) up 7.1% at GBP 1,422.6 million
  • Total inflows from Retail businesses down 13.1% at GBP 137.4 million 
  • Protection GWP up 35.4% to GBP 67.2 million 

Ongoing development of the business

  • Court has approved legal transfer of Groupama Insurance Company Limited business, now operating under one Ageas brand
  • Wider range of products now available to more brokers 
  • Ageas Insurance launched as sole underwriter for RIAS and Castle Cover strengthening Ageas UK’s position in growing over 50’s market

Well capitalised business  

  • Strong capital positions maintained  

Announcing the 2013 nine month results, Andy Watson, Chief Executive of Ageas UK commented: 
“It is very pleasing to see improvements in our income, profit and combined ratio which incorporates the addition of our strongly performing Groupama acquisition and the relatively benign weather conditions year-to-date. Our promise to offer more products to more brokers remains important to us and we will continue to focus on supporting brokers through a difficult trading environment.   The market remains competitive, especially in Motor where rates have decreased significantly.  Our goal is to maintain our underwriting discipline and continue to write good and sustainable business, providing our customers with the high levels of service they have come to expect from Ageas.” 

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 5.6% to GBP 73.7 million (GBP 69.8 million 9M 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 Insurance Company Limited.  

Total income was up 6.0% at GBP 1,627.2 million (9M 2012 GBP 1,535.9 million) with the inclusion of Groupama Insurance Company Limited offsetting a tough trading environment in Retail, and more generally in Motor where premiums are down 14% year-on-year across the market .  

The combined ratio improved to 98.2% (vs. 98.6% 9M12) mainly driven by an excellent performance in Household due to the continuing benign weather conditions resulting in improved claims ratios in each quarter. In line with a disciplined underwriting approach, there have been improvements in loss ratio in Motor and Travel, offset by increased expenses on a like for like basis. This is due to a focus on writing a more profitable mix of business and lower average premiums in line with the market trend.  Commercial & Special Risks business has seen a four point combined ratio improvement.   

Ageas’s award-winning track record continued during the period, being awarded Insurance Company of the Year for the second year in a row at the Bodyshop Awards. In terms of service, Ageas achieved an ‘outstanding’ rating for Personal Lines service following a recent ‘Investors’ in Customers’ survey of brokers and was voted by brokers as ‘top’ for Personal Lines Underwriting Service and second for Personal Lines Claims Service in the most recent Insurance Age Sentiments survey (November 2013). Ageas has also been shortlisted for a number of forthcoming awards at this year’s Insurance Times Awards including Personal Lines Insurer, Claims Initiative, Customer Service Initiative and Brand Campaign of the Year.  


Ageas Insurance

Ageas Insurance’s focus has continued to be on profitable business with a Net Profit of GBP 49.3 million, an increase of 2.2% on the same period last year (9M 2012: GBP 48.3 million). This is despite a challenging Motor market, the inclusion of some large losses which have impacted the result and the prevailing low investment yield environment.

Gross Written Premiums (GWP) during 2013 decreased by 2.9% over the same period in 2012 to GBP 829.2 million (9M 2012 GBP 854.0 million).  

Motor (Private Car and Commercial Vehicle) income rose slightly to GBP 495.5 million (9M 2012 GBP 489.7 million). Aligned with the current market trend, Ageas Insurance has seen lower average premiums but continues to maintain its pricing discipline, writing more business in its chosen segments.  Total Motor policies now stand at a record 3.5 million. 

Household income was slightly down (1.4%) at GBP 206.2 million (9M 2012 GBP 209.2 million), with overall market rates softening by as much as 5.8% for Buildings Insurance and 3.8% for Contents Insurance . The Travel account reduced by 3.0% to GBP 33.9 million (9M 2012 GBP 34.9 million) along with an anticipated reduction in Commercial and Special Risks inflows by 22.1% to GBP 93.6 million (9M 2012 GBP 120.2 million), reflecting a continued focus on profitability as we cleansed the Commercial book.  The combined capability of Ageas Insurance and Groupama Insurance Company Limited means the company is well placed to grow in its chosen segments.  

The acquisition of Groupama Insurance Company Limited has contributed GBP 252.2 million in GWP and GBP 11.7 million in net profit to the overall nine month results.  The business 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 legal integration of Groupama Insurance Company Limited has now completed and its brand has been removed from the UK market 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 341.1 million during the period (GBP 474.1 million 9M 2012). In a market environment of strong competition in Motor, Tesco Underwriting is focusing both on maintaining firm pricing discipline through the underwriting cycle and on its core Clubcard customers, improving the book’s risk profile.

Net Profit, after minority interests, was GBP 4.3 million (9M 2012: GBP 10.8 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 an improved result for the remainder of the year.

Life Protection:

Ageas Protect continued to grow with total GWP inflow increasing by 35.4% to GBP 67.2 million (9M 2012 GBP 49.7 million). New Annual Premiums decreased by 10.5% to GBP 22.9 million (9M 2012 GBP 25.6 million) reflecting a continued subdued market following Gender Pricing and Tax changes at the end of last year and distribution changes brought about by the Retail Distribution Review. 

The company now protects over 296,000 lives, an increase of 20% compared to the same period last year.  Growth has been heavily driven by the company’s award-winning approach to underwriting and technology, high levels of service and product innovation. As part of its commitment to offer compelling products to intermediaries, the business enhanced its critical illness product in September, giving customers real added value and peace of mind, while future-proofing definitions based on medical advancements.  

Ageas Protect had a post tax result of GBP (1.5) million compared to GBP 0.3 million for the same period last year in line with expectations, recognising the costs of financing the continued 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 19.9 million (9M 2012: GBP 18.6 million) including a one-off deferred tax benefit of GBP 2.6 million. In light of the competitive market, actions have been taken, within the Retail companies, to reduce expenses by 10.7% compared to the same period last year. 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. Ageas Retail’s over 50 brands, RIAS and Castle Cover, have delivered an additional GBP 6.8 million in premiums since moving its underwriting to Ageas Insurance in August 2013 compared to the prior year, strengthening Ageas’s position in this key growing market.
Overall, total inflows for Other Insurance activities were down 13.1% to GBP 137.4 million (9M 2012: GBP 158.1 million) reflecting a tough and highly competitive environment.  The net profit decreased to GBP 9.9 million (9M 2012: GBP 10.5 million), as a result of the increased administration and financing costs on the expansion of the business.

Ageas UK Results Summary

Table showing Ageas UK nine month 2013 financial results summary