Esure sees healthy rise in GWP and profits

In its first interim results as a listed company, Esure Group today announced a rise of 6.7% in gross written premium (GWP) to £265.4m for the first six months of 2013, compared with £248.8m in H1 2012.

Within that, motor GWP grew 6.8% to £221.9m (H1 2012: £207.7m), which Esure attributed in part to customer retention on its Sheilas’ Wheels book following the EU Gender Directive. Household GWP rose by 5.8% to £43.5m (H1 2012: £41.1m).

Additional services revenue from add-on insurance products saw a modest rise of 2.8% in the period, to £51m (H1 2012: £49.6m).

The group posted a 7.2% rise in trading profit, to £65.2m (H1 2012: £60.8m) and a 15.2% rise in profit after tax, to £44.3m (H1 2012: £37.9m).

Combined operating ratio also showed positive change, improving by 4.8 percentage points to 89.6% (H1 2012: 94.4%). The group cited an improvement in its net loss ratio, after 2012’s H1 result was affected by exceptional weather claims. It also reported a rise in its prior-year reserve releases to £36.9m (H1 2012: £35m).

The group also announced an interim dividend of 2.5 pence per share, representing a payout ratio of 70%.

Esure Group chairman Peter Wood (pictured) said: “Our first interim results as a listed company show continued volume and profit growth, with improvements in our combined operating ratio and underwriting performance. Our strategy has enabled us to adapt well to our changing marketplace and has stood us in good stead.”

Chief executive Stuart Vann said: “The first half of 2013 has yielded good results for our business, with some expected developments starting to bear fruit. Our retention of Sheilas’ Wheels customers following the ECJ gender-neutral pricing changes in December 2012 is yielding the predicted benefits. The government’s civil justice reforms earlier this year are starting to show promising trends in the efforts to reduce gratuitous personal injury claims; however, it’s still early days.

“Gross written premiums and profit after tax are both showing steady improvements, the group remains prudently reserved and we continue to work on further enhancing our pro-consumer additional insurance products. We are pleased with our progress in a competitive market through our nimble, focused and adaptable approach.”

An Esure spokesman said Sheila’s Wheels was able to keep its prices steadier than its competitors after the EU gender directive came into force in December because the vast majority of customers were women. Rate changes of less than 4% within the division had enabled the company to retain more women customers than its competitors.

The Laspo reforms, which put a brake on exaggerated personal injury claims, had also contributed to growth because they had enabled the company to move back into some geographic and demographic areas of the motor market, he said.

Esure’s H1 2013 results