Profits helped by healthy return on investments
NIG has posted a 350% increase in profits just weeks after closing half its offices, writes Saxon East.
The broker-only insurer’s pre-tax profits rocketed from £11.8m to £52m for 2008.
The results come six weeks after NIG announced plans to cut the number of its commercial offices from 18 to 10. Managing director Nigel Pearce also admitted there would be job losses, but gave no numbers.
A spokesman for NIG denied that the restructure was related to the company’s financial performance.
He said: “The recent proposals were much more focused on making sure the business was in the right shape for brokers. We asked ourselves how we could run the business more effectively and decided it was through centres of expertise.”
NIG’s profits were helped by healthy returns on its investments, which increased from £823.4m in 2007 to £878.5m.
It also paid out significant amounts for flood damage in 2007.
Its net insurance premium revenue for 2008 also increased, from £730m to £776m.
Combined ratio improved from 110% to 105%.
NIG’s directors believe the commercial lines insurer, part of the RBSI group – which made a £780m profit in 2008 – is strong enough to come through the downturn relatively unscathed.
Its Companies House financial report says: “The company has considerable financial resources and, as a result, directors believe the company is well placed to manage its business risks successfully, despite the uncertain economic climate.
“After making enquiries, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future.”
NIG, which employs about 900 staff, is closing offices in Cardiff, Chelmsford, Exeter, Leicester, Liverpool, Newcastle, Reading and Redhill.
Despite concerns among some brokers about losing their local office, Denis Morgan, chief executive of Westinsure, said the restructure had not affected his network’s longstanding commitment to NIG. He said the restructure was about NIG adapting to challenging market conditions.
Elsewhere in RBSI, it emerged this week that Churchill pre-tax profits dropped from £204m in 2007 to £190m in 2008, while Direct Line's dropped from £342m to £282m.
