MMA profit leaps 88% to £13.7m

Benign weather conditions and lower management expenses helped intermediary-only insurer MMA to an 88% jump in operating profit in 2003.

For the year to 31 December 2003, MMA recorded operating profit of £13.7m, up from £7.3m in 2002. Gross written premiums (GWP) rose 6.4% over the period, to £203m.

MMA chief executive Garry Fearn said the result was "comfortably the best profit the company has achieved so far", helping MMA to a combined operating ratio of 99.7%.

Property performed particularly well, with GWP growth of 16.2% in the household book and 10.3% in the commercial property and packages book.

But private motor still represents 46% of MMA's total portfolio, and Fearn said it continued to play a "significant part".

He said private motor premium income increased by just under 10% in 2003, which he described as the "top of the cycle".

Fearn said that the management expense ratio fell by 1% to 7.4% of premium income during the year. He said that lowering costs helps to "close the gap" between intermediated and direct insurers.

"We see that as a very important part of our offering to brokers," Fearn said.

He said that while the result was aided by benign weather conditions, MMA was starting to see an increase in subsidence claims. But Fearn said that as MMA's property "footprint" had always avoided subsidence-prone areas, he expected its exposure would be lower than the average.

Fearn said he was "pretty confident" that MMA would be able to sustain its 2003 performance in 2004, despite being "resigned to the fact" that rate increases would lag claims inflation in the coming year".

He said that the 2004 results would also begin to reflect the change in MMA's distribution strategy, which was broadened late last year from broker-only to intermediary-only. The insurer has since signed a deal to distribute through the Misys Countrywide Network.