Talking heads: Stuart Vann, Esure

Esure Group Holdings made a profit of £60.2m in the first half of 2012, up 46% on last year. Here, chief executive Stuart Vann explains the numbers

Q: How would you describe Esure’s performance in the first half of 2012?
A: Esure has had strong growth for the first six months of the year as a result of further improvements in its loss ratio and combined operating ratio, despite the impact of the severe June weather events. Esure has also recorded further growth in its additional services revenue per in-force policy.

Q: Operating profit was up by 46% despite relatively modest GWP growth. What do you attribute this to?

A: A steady GWP and policy growth is clearly good in a softening market. The market should not be softening given the huge pressures on motor and home insurers – plus claims inflation, Solvency II, fraud and other cost-increasing factors – but the market remains cyclical and so it softens. Our growth is thanks to a combination of the rewards of our highly analytical and controlled underwriting, and the growth in additional services. 

Q: Esure’s loss and combined ratios improved despite the weather impact. What caused this?

A: This is thanks to natural reserve movements and our underwriting approach over the past few years. At a total level we also continue to adopt a prudent reserving position.

Q: What are the components of Esure’s ‘additional services revenue’?

A: These are the additional products that our customers purchase alongside their core product holdings: motor legal protection, home emergency, and for Esure, new services such as misfuelling and lost/stolen key cover. 

Q: Are Esure’s future profits and revenues under threat from forthcoming changes such as the Jackson reforms, which will ban referral fees?

A: The exact position is still unclear, but the reforms should be beneficial to Esure and the industry as a whole to 
reduce litigation.

Q: What will be the impact of the ECJ gender ruling on Esure’s future profits and revenues?

A: This will ultimately depend on what the market does when the gender ruling comes into force in December. Our insurance brand Sheilas’ Wheels has a predominately female-based book and a very strong consumer female-facing brand. The ECJ has not banned branding, however, so we will continue to market our products to this target audience.

Q: Direct Line Group is pushing ahead with flotation plans this year. What do you think of IPO conditions, and could you provide an update on Esure’s flotation plans?

A: We are looking to float from the end of 2012 onwards but are extremely patient and in no rush whatsoever.