Continued strong growth in net profit 
  • Net profit up 38.0% to GBP 19.4 million  (3M 2012: GBP 14.1 million) 
  • Overall combined ratio at 99.9% (3M 2012 102.3%)  
Total income flat in increasingly competitive market  
  • Total income down 0.3% to GBP 511.3 million compared to 3M 2012  
  • Non-Life Gross Written Premiums (GWP) down 0.7% at GBP 442.4 million  
  • Total inflows from Retail businesses down 8.9% at GBP 47.7 million
  • Protection GWP up 41.3% to GBP 21.2 million  
Good progress on strategic priorities
  • Integration programme to merge Groupama Insurances into Ageas is on track and progressing well
  • Wider range of products now available to more brokers
  • Ageas Law recently launched 
Well capitalised business 
  • Strong capital positions maintained in Ageas Insurance, Groupama Insurances, Ageas Protect and Tesco Underwriting  
Announcing the 2013 first quarter results, Andy Watson, Chief Executive of Ageas UK commented:

“It’s very pleasing to see the strong rise in our profits and an overall improving performance in our combined ratio, in what is typically a tough first quarter for the industry.  Our acquisition of Groupama Insurances is beginning to have a positive impact on our result and the integration process is going well. There are some market-wide challenges, particularly in Motor where premiums are reducing, which is having an impact on income.  Our focus continues to be on disciplined underwriting, creating long term, sustainable returns for Ageas and our brokers, clients and partners.” 

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.
In what is typically a challenging seasonal quarter for the industry, the company has delivered a significant increase in overall net profit, up 38.0% to GBP 19.4 million (GBP 14.1 million 3M 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 broadly flat at GBP 511.3 million (3M 2012 GBP 512.9 million) with the inclusion of Groupama Insurances offsetting a tough trading environment, particularly in Motor where premiums are falling across the market. 
The overall combined ratio was 99.9% (3M 2012 102.3%), in positive contrast to recent years where the first quarter result has been hit by higher claims linked to adverse weather. While the expense ratio has been impacted by the reduction in GWP, this has been offset by an improving loss ratio. 
Ageas also recently launched Ageas Law with NewLaw Solicitors, a personal injury specialist law firm.  It offers a one stop, high quality personal injury claims service to impacted customers, together with an ability to exercise greater control over claims costs for Ageas. This strategic development is in response to changing UK legislation and a desire to extend claims support to customers who need legal advice when suffering an injury in motor accidents.  It will generate revenue, assist in the fight against fraudulent or spurious claims and will be guided by an Ageas Ethics Committee to oversee its activities, ensuring that the claims service offered is in line with the company’s reputation, values and behaviours.
Ageas’s award-winning track record continued during the period being awarded Best E-commerce Provider at the LifeSearch Awards, the Institute of Customer Services ‘World Class’ ServeMark accreditation for Ageas’s Household service proposition, the Barker Brooks Claims Innovation Client Care Award and being voted by brokers for the Best Personal Lines Underwriting Service in the Insurance Age Sentiment Survey.  Ageas has also been shortlisted for a number of awards including General Insurer of the Year at the 2013 British Insurance Awards.


Ageas Insurance

Ageas Insurance’s focus has continued to be on writing profitable business, particularly in Motor (Private Car and Commercial Vehicle) and taking pre-emptive actions to protect its result in other areas such as Household.  This, together with relatively benign weather in the quarter, has led to an increase in profitability.    
Net Profit for Ageas Insurance was GBP 13.1 million, an increase of 47.1% on the same period last year (3M 2012: GBP 8.9 million).
Total GWP during 2012 decreased by 9.2% over the same period in 2012 to GBP 272.5 million (3M 2012 GBP 300.0 million). 
There was a decline in Motor (Private Car and Commercial Vehicle), where income was down 4.3% to GBP 168.2million (3M 2012 GBP 175.7million). As market prices are falling in Motor, Ageas Insurance has maintained its pricing discipline to protect future profit flows. Household income decreased by 7.8% to GBP 68.6 million (3M 2012 GBP 74.4 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 to GBP 9.5 million (3M 2012 GBP 12.2 million) along with a reduction in Commercial and Special Risks to GBP  26.2 million (3M 2012 GBP 37.7 million) reflecting a continued focus on profitability.

Groupama Insurances

The business has contributed GBP 70.2 million in GWP and GBP 2.5 million in net profit to the overall results in the first quarter.  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 99.7 million during the period (GBP 145.5 million Q1 2012). The decline in year on year written premium reflects continuing strong competition in Motor. In this environment, 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 1.3 million (Q1 2012: GBP 2.6 million) primarily reflecting the impact of lower volumes, an increase in Motor claims linked to bad weather conditions in January and lower investment income.  

Life Protection:

Ageas Protect continued to grow with total GWP inflow increasing by 41.3% to GBP 21.2 million (3M 2012 GBP 15.1 million) whilst New Annual Premiums decreased by 5.3% to GBP 8.5 million (3M 2012 GBP 9.0 million) reflecting a subdued market following Gender Pricing and Tax changes at the close of last year. 
The GWP growth continues to reflect the company’s progress in building customer numbers and now protects over 275,000 lives, an increase of 30% 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.  The business had a post tax result of GBP (0.4) million compared to GBP (0.1) million for the same period last year.

Other Insurance Activities:

Within Ageas UK’s Other Insurance activities, the Retail companies delivered an increase in net profit to GBP 6.3 million (3M 2012: GBP 5.8 million). Ageas Retail consists of RIAS, Kwik Fit Financial Services (KFFS), Ageas Insurance Solutions (AIS) and Castle Cover, all of which strengthen Ageas’s overall distribution and manufacturing mix. Total inflows were GBP 47.7 million (3M 2012: 52.3 million) reflecting a tough and highly competitive environment.  The net profit for the total Other Insurance activities increased to GBP 3.0 million (3M 2012: 2.6 million), a resilient performance given the challenging trading conditions.

Ageas UK Results Summary: 

Table showing Ageas UK first quarter 2013 financial results summary