Swiftcover loss adds to woes for new boss Masson

Swiftcover racked up a £10.7m loss last year, presenting its new French boss Yves Masson (pictured) with another challenge in turning around the embattled business.

The 2011 loss, revealed in the accounts of Swiftcover Insurance Services, is a big fall from the £291,000 profit posted in 2010.

The firm sells and markets policies underwritten by AXA UK, taking a commission for its services, and made a gross profit of £52m (2010: £48m).

But it was pushed into the red by rising distribution costs of £29.3m (2010: £22.1m) and administrative expenses of £36m (2010: £25m) as it chased growth.

Swiftcover’s gross written premium rose 54% to £478.1m (2010: £308.6m) while policies grew to 1.2 million (2010: 829,377).

The loss at Swiftcover Insurance Services would not necessarily be a concern to AXA top brass if it was placing profitable business.

But AXA UK’s direct motor business, largely made up of Swiftcover business, had to cleanse its book. AXA UK as a whole reported a 2011 private motor combined ratio of 121%, 15 points off the market average.

An AXA UK spokesman said: “Swiftcover Insurance Services is operated in effect as a services company which houses certain costs associated with the running of both our direct businesses. It is not the same as, and does not reflect, the profitability of the insurance business of Swiftcover, which is reported as part of the established financial calendar.”

AXA UK also suffered a management overhaul as big names including personal lines chief executive Steve Hardy and underwriting director Craig Staniland headed for the door.

Masson has been parachuted in as chief executive of personal direct and partnerships to stabilise the business. He faces a difficult task in achieving underwriting profitablity.

AXA’s direct motor arm failed to perform when industry-wide rates were hiked 30% between 2010 and 2011, and is attempting a turnaround as premium rises level off.

But Masson’s boss, AXA UK chief executive Paul Evans, is confident AXA is on track. At half-year results in August, he described the profitability of AXA’s direct motor business, and Swiftcover in particular, as “disappointing in recent years”.

But he added: “Actions were taken over the first quarter of 2012 to improve the risk profile of the direct motor portfolio, which temporarily depressed both new business and renewal retention levels as the changes were applied.”