Ageas UK’s consistent growth has seen its chief exec promoted to group COO. We look at how the UK business will be key to the group’s overall strategy.
The recent management shake-up at Ageas UK highlighted the importance of the business in the overall group structure.
The UK arm has grown rapidly since 2009. Out of the four core non-life operating units - UK, Asia, Belgium, and Continental Europe (CEU) - the UK non-life business grew by the largest margin, by £65m between 2009 and 2011.
This is in comparison to the Asia and Belgium arms, which posted small declines, and CEU which grew only slightly. (See table below)
When Ageas revealed its group strategy to investors in London last September, it outlined its goal for non-life business to be about 40% (currently 29%) of the total group business, and to achieve a 11% return on non-life shareholders’ equity of €1.2bn (£997m), by 2015. To do this, Ageas said it would need to make profit of €33m a quarter to hit their 11% ROE target.
The group will rely heavily on the UK to meet this target after posting strong quarterly net profits in the past two years (see table below), aided by strong penetration into the broker market (up 12% to 96% in the 12 months to November 2011).
The group is also targeting a group combined operating ratio (COR) below 100% by 2015. In November, Ageas UK posted an overall COR of 98.6% for the first nine months of 2012, an improvement from 99.9% for the same period in 2011.
Former Ageas UK boss promoted to group role
Outgoing Ageas UK chief executive Barry Smith (pictured) will be expected to deliver the same kind of performance across the other Ageas group businesses in his new role as group chief operating officer reporting to group chief executive Bart De Smet.
The solid performance of the UK business could go some way to explaining why the Ageas group board wants Smith to have operational responsibility for the rest of its business. The insurer wants to deploy at least 25% of its capital in emerging markets in Europe and Asia (from 15% end 2011).
Smith told Insurance Times his new role was “totally consistent with the group strategy”, and that the insurer would “continue to do what we do in the UK”.
He said: “It’s key for us to take the right actions in the UK. That means where we have an advantage and we see an attractive market, let’s make sure we move quickly. They key to that will be the continuation of staying very close to understanding the real needs of the broker market.”
He added: “We’ve made some very early decisions based on the acquisition of Groupama and that’s so we can continue to concentrate on what the market wants us to do.”
Watson inherits strong UK business
New UK chief executive Andy Watson is inheriting a business from Smith that is in a healthy position. Based on the current performance of the UK business, keeping the ship steady would be enough to keep group bosses happy.
Watson said: “The plans that we have put together for 2013 within the UK, and the plans that I inherit and have partially co-authored, are very much aligned to those group targets.”
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