Chaucer raises rate increase forecast for 2011

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Lloyd’s insurer Chaucer expects rates across its book to increase 6.6% during 2011, an increase on its previous forecast of a 2.2% rate rise.

Chaucer made its original 2011 rate forecast in January, and has now revised it following the string of natural catastrophe losses since the beginning of the year.

However, the insurer expects its biggest percentage rate increase for the year to come from UK motor business. It has already achieved a 19% increase in UK motor during the first quarter of the year and expects the full-year rate rise to be 16.5%. Chaucer had previously estimated a rise of 14.2% in the business line.

In UK private car alone, Chaucer said rates continue to increase in excess of inflation levels and it expects an annual increase of 25%, taking into account an expected second-half slowdown in rate rises.

“We are ahead of our planned business volumes for the first quarter and expect our reported combined ratio to be less than 100% for 2011,” the company said in its Q1 2011 interim management statement.

It added that the initiatives to develop its UK motor book are on track, which the ChaucerDirect offering generating “significant” volume growth from the four major aggregator sites and obtaining renewal retention rates above those for Chaucer’s broker business.

Chaucer’s overall gross written premium for Q1 2011 was £274.1m, up 9.6% on the £250.1m premium it wrote in Q1 2010.

Commenting on US insurer Hanover’s planned acquisition of Chaucer, which Chaucer’s board recommended to shareholders on 20 April, chief executive Bob Stuchbery said: “This transaction will enable us to benefit from the scale, diversity and financial strength of being part of an enlarged group while we focus on the successful execution of our Foundation Flex Flagship strategy.”

Chaucer’s rate increase forecast for 2011 in % (compared with previous estimate)