Groupama combined UK profit up 30%

Groupama’s combined UK operations, which comprise the insurance and broking divisions, made a profit of £13.7m in the first half of 2010, a 30% increase on the £10.5m made in the same period last year.

Profit improvements at Groupama Insurances, the insurance unit, were driven by the performance of the commercial lines division and continuing efforts to streamline the company’s expense base.

Groupama said that profits at the broking division also increased, making “another significant contribution to the combined results”.

Total revenues at Groupama Insurances increased 5.2% to £237.7m from £225.9m in the same period last year.

Personal lines revenues increased 7% to £151m from £141.9m. The company said its household business and motorcycle portfolio continued to grow. However, it added that volumes in its private car portfolio remained relatively flat thanks to double-digit rate increases, which were required to boost profitability. The company added that such strong measures would need to continue to improve the technical result, which has been hit by the rising cost of fraud and the growing influence of claims farming.

Commercial lines revenue fell slightly to £57.5m from £57.9m. The company said profitability remained strong in the division but mainly because of reserve releases from prior years. The company said competition for fleet and liability business in particular was fierce, with inadequate rating levels and continuing evidence of “unacceptable” dual pricing activities.

Groupama added, however, that it had continued to build its commercial offering in the first half of 2010, with the launch of Optima Liability – a new liability contract for small businesses – and the introduction of a variable commission option across its commercial product range. It plans to introduce Optima PI, a new professional indemnity product, in the second half of the year following a successful pilot with brokers.

“Our performance over the first six months has shown some signs of progress although we still have a long way to go,” said Groupama chief executive François-Xavier Boisseau in a statement.

“Market conditions are really tough and although we are finally seeing some sense return in terms of private car pricing there is little evidence of such sanity in the commercial lines arena.”

He added: “At best rates are flat but in areas such as fleet and liability they are still falling and a fight for volume is being exacerbated by major players offering enhanced commission and dual pricing. The market has said many times that this sort of situation would never occur again but sadly it seems that the bad old days are back. Things need to change.”