Executive summary

Increased year on year profit reflects benign weather impact and improved Commercial result

  • Net profit of GBP 29.5 million compared to a profit of GBP 25.3 million (6M 2014).
  • Overall combined ratio improved to 98.3% (6M 2014: 100.7%).

Total income reflects market conditions where average premiums remain low

  • Total income: GBP 961.0 million (6M 2014: GBP 1,024.9 million).
  • Total Non-Life Gross Written Premiums (GWP): GBP 881.3 million (6M 2014: GBP 940.4 million).
  • Total inflows from Retail business: GBP 79.8 million (6M 2014: GBP 84.6 million).

Well capitalised business

  • Strong capital positions maintained in Ageas Insurance and Tesco Underwriting.
  • Ageas Insurance assigned A- with a positive outlook rating from Standard and Poor’s  in May 2015 and reaffirmed A+ ‘Strong’ by Fitch in July 2015.

Ageas UK Results Summary

Table showing Ageas UK first half 2015 financial results summary

* Commercial and Special Risks includes costs of integration. Commercial lines including Commercial Motor reported a total Combined ratio of 84.7% (vs. 101.3% in 2014)

Announcing the half year 2015 results, Andy Watson, Chief Executive of Ageas UK commented:

“As we’ve progressed through the first half of 2015, we’ve continued to deliver a profitable performance largely driven by the positive impact from the benign weather in the first quarter as well as our improved Commercial lines result linked to our disciplined approach.

“Competitive conditions have continued in both the Home and Motor markets as a result of low average market premiums. It’s pleasing to see a much needed upward trend in Motor prices over the last quarter, a trend that is long overdue.

“During the first half of the year we have continued to run two very major change programmes. Within our insurance business, we are nearing completion of our integration programme. And within Ageas Retail, we continue to focus on our strategy of simplification and are making good progress with this”.

Business Results

As a result of the sale of Ageas’s life protection business, Ageas Protect, to AIG at the end of 2014, all historic data has been restated accordingly to allow a like for like comparison. During the first half of 2014 Ageas Protect reported inflows of GBP 52.5 million and a post tax result of GBP 1.0 million.

Ageas UK

Ageas UK is focused on delivering profitable returns through a clear and consistent multi-distribution strategy and partnership approach with brokers, affinities, intermediaries and through its own Retail business. The combination of high quality service and low cost delivery remains a strategic priority for the Ageas UK businesses.

During the first six months of 2015 Ageas UK reported a net profit of GBP 29.5 million (6M 2014: GBP 25.3 million) as a result of benign weather in the first quarter of 2015, as well as an improved performance in its Commercial lines business.

Total income, including Tesco Underwriting, was GBP 961.0 million (6M 2014: GBP 1,024.9 million), where Ageas has continued to implement a disciplined approach to pricing against a market where Household and Motor average market premiums continue to be low.

Ageas has around 8 million customers across its businesses in the UK and insures 3.6 million Motor policies. In the first half of 2015, new deals were announced with Virgin Money and Volkswagen Financial Services, demonstrating the trust that significant brands place in Ageas to meet their customers’ needs.


Ageas Insurance

Ageas Insurance’s net result was GBP 30.4 million (6M 2014: GBP 21.8 million) reflecting an improved performance on Household following relatively benign weather in the first quarter. The result also reflects   a continued good performance in Commercial lines business with brokers as a result of the strategic focus in this area.

In the first half of 2015 Ageas Insurance delivered Gross Written Premiums (GWP) of GBP 681.5 million (6M 2014: GBP 717.6 million) reflecting deliberate pricing action taken in Personal lines against a competitive Motor and Household market.

In Personal lines, Motor (Private Car and Commercial Vehicle) income was GBP 407.4 million (6M 2014: GBP 427.2 million), while Household income was down at GBP 152.7 million (6M 2014: GBP 168.9 million).

Commercial and Special Risks inflows saw an increase of 7.3% to GBP 95.4 million (6M 2014: GBP 88.9 million) as a result of the good performance of Special Risks and schemes business. The company’s refreshed focus on growing Commercial lines business is receiving positive feedback from brokers, especially in terms of schemes business where Ageas has a growing reputation for excellence.

The combined ratio for Ageas Insurance continued to deliver a sub 100% performance and by the end of the first six months improved to 98.3% (vs. 100.7% 6M 2014). The Motor ratio deteriorated to 100.7% (6M 2014: 99.6%) reflecting a higher frequency of accident claims linked to increased traffic volumes[1] combined with continued higher third party damage average costs. The benign weather contributed to a good Household ratio performance at 91.8% (6M 2014: 98.1%). As a result of a disciplined Commercial lines approach, the total Commercial and Special Risks ratio improved to 98.6% (6M 2014: 111.2%). As an industry like for like comparison, Ageas’s Commercial lines ratio, including Commercial Motor, significantly improved to 84.7% (6M 2014: 101.3%).

Ageas Insurance was assigned an A- with ‘positive outlook’ rating from Standard and Poor’s in May and reaffirmed A+ ‘Strong’ by Fitch in July, further reflecting the company’s strategic importance to Ageas Group.

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 199.7 million during the period (6M 2014: GBP 222.8 million). Competitive market conditions led to lower new business and average premiums across both Motor and Household in the first six months.

The net result of Ageas’s interest in Tesco Underwriting was a profit of GBP 3.2 million (6M 2014: loss of GBP 1.4 million).

Other activities:

Within Ageas UK’s Other activities, the Retail business delivered a net profit of GBP 3.6 million (6M 2014: GBP 6.7 million). Total Other business reported a net loss of GBP 4.1 million (6M 2014: profit of GBP 4.9 million) reflecting the benefit from the receipt of a legal settlement in last year’s result, as well as strategic project costs and stable regional headquarter in this year’s result.

Total inflows were GBP 79.8 million (6M 2014: GBP 84.6 million) reflecting competitive Motor and Household market conditions.

As part of Ageas’s Retail strategy to build on its position as the UK’s fourth largest Personal lines intermediary and to respond to the challenges of a competitive market, actions continue to be taken to simplify the business model. Significant progress has been made this year on the migration of all Retail products onto one IT platform.

In the first half of the year, new strategic partnerships have been announced with both Virgin Money and Volkswagen Financial Services (UK) Ltd.            

[1] All motor traffic increased by 1.8% in the year ending March 2015 compared to the prior year. Department for Transport, Quarterly Road Traffic Estimates, Great Britain, January – March 2015, Published May 2015