Fortis UK nudges back to profit

Fortis UK announced H1 non-life gross written premiums increased 16.6% £468.4m. It said overall it made profit before tax of £8.4m – an improvement on its Q1 £3.2m loss but still way behind last years H1 £26m profit.

Its combined ratio improved from its Q1 high of 110.2% to 106.5% for the half year. This time last year the Fortis combined ratio was 104.4%.

Fortis said it had included £3.4m of set-up costs for the new partnership with Tesco Bank within the half-year results.

UK business

Growth in the personal lines business reflects an increase in the household and travel books to £118.0m (92.4m) and £28.0m (£22.7m). Fortis said apart from leaky pipes claims, the household book is performing well but “returns from the travel book remain challenging with rate increases across the market lagging behind claims cost experience”.

Private car GWP was up 2.4% to £235.1m (£229.6m). Fortis said it was hit by “the industry-wide issues of increased personal injury claims and the need for further rate strengthening”.

Technical changes

Fortis insisted it had “continued its consistent approach of pricing in line with the underlying risk, with recent technical rating changes including full post code rating, use of external data sources such as council tax bands, and a focus on high frequency bodily injuries”.

Fortis claimed to have the lowest unit cost of production in the private motor market. It insures 1.6 million cars, making it the second largest UK-based private car insurer.

It saw a 49.8% growth in commercial lines to £80.2m (£53.5).

Barry Smith

Barry Smith, chief executive, said: “I am pleased that Fortis has delivered a robust set of results despite the continuing difficult economic environment. Our income growth is strong, thanks to our multi-distribution strategy and we have demonstrated our aim to grow further with the acquisition of Kwik-Fit Insurance Services and continuing new business wins.

“Following a challenging first quarter for the whole industry, we are now seeing improvements in our profit and ratio performance and expect to see further improvement during the rest of the year.”

Fortis UK

“The first quarter results were impacted by industry-wide issues including the severe weather experienced in January, poor private car market performance and lower realised capital gains compared to last year.

“However, Fortis UK delivered a better performance in the second quarter as a result of planned improvements to its underwriting and technical capability, including the implementation of a new underwriting rating structure for motor.”