Esure posts £7.5m loss ahead of 2012 listing

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Private motor and home insurer Esure Insurance Limited made a loss of £7.5m in 2010, an improvement on the £14.2m loss it made in 2009.

Esure is planning to float in the second half of next year, gunning for an amibitious £2bn listing.

Esure’s loss ratio increased by 2.8 percentage points to 96.3%, which boosted the firm’s combined operating ratio by 1.8 points to 114.6% from 112.8%. Esure attributed the increase to the severe winter weather at the beginning and end of 2010.

The increase in the loss ratio was partly offset by a 1 point cut in the expense ratio.

Continued competition in the motor and household markets, coupled with Esure’s efforts to improve its motor book, resulted in a 9.5% reduction in gross written premium to £468.5m in 2010 from £517.5m in 2009.

“Significant increases in motor personal injury claims have been a concern this year to the market as a whole and as a result, the company continues to take steps to improve the quality of its motor book,” the insurer said in a Companies House filing. “Although this has limited the growth of the business, it has also been possible to post increases in premium rates.”

Despite the lower premium income and higher loss ratio, Esure’s technical result improved to a loss of £17m in 2010 from a loss of £27.9m in 2009. This was in part driven by the fact that additions to claims provisions were only £19.4m in 2010, compared with £88.8m the previous year.

The technical account also benefited from a £11.1m release from unexpired claims provisions and a £3m release from claims equalisation provisions. The company added £13.6m and £1.6m to these reserves respectively in 2009.

Esure had net claims reserves for outstanding claims of £461.1m in 2010, which its actuary, Towers Watson, described as “soundly based” because it tallies with the actuary’s own projection of the corresponding liabilities based on past and current trends.

Esure 2010 results in £m (compared with 2009)