Ageas boost profits four-fold, cuts COR

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Ageas UK made a profit before tax of £34.5m in the first half of 2011, more than four times the £8.4m it made in the same period last year.

The improvement was driven by a surge in non-life profit to £23.4m (H1 2010: £900,000) and a 38% increase in profits from the other insurance and retail broking division to £13.1m (H1 2010: £9.5m).

Ageas’s broking operations include RIAS, Kwik Fit Financial Services, Ageas Insurance Solutions and Castle Cover.

Ageas also shaved 5.3 percentage points from its combined ratio, bringing it to 101.2% in the first half of 2011(H1 2010: 106.5%). Excluding the Tesco Underwriting business and prior-year claims, the combined ratio was 98.7% (H1 2010: 106.1%).

The insurer’s motor combined ratio also improved, dropping 12.1 percentage points to 96.9% (H1 2010: 109%). Ageas attributed the improved motor result to its pricing approach. Recent changes include full postcode rating.

“It is very encouraging indeed that the delivery and consistency of our strategy has produced record growth combined with strong profitability at the half year. We have seen growth in non-life across both personal and commercial lines and specific actions have led to a turnaround in motor performance,” said Ageas UK chief executive Barry Smith in a statement.

He added: “The successful integration of Kwik Fit Financial Services and Castle Cover, together with organic growth, has doubled the size of our retail operations and new life protection partnerships have enhanced our distribution capability, complementing our growing independent Financial Adviser channel.”

Total income increased 85% to £882m (H1 2010: £478.1m). Ageas’s non-life business alone saw income increase 84% to £862.8m (H1 2010: £468.4m).

The Tesco Underwriting business, launched last October, now has 1m customers and has generated £397.8m in gross written premium since launch. Some £311.2m of this was generated in the first half of 2011.