The Knowledge: Intermediated Personal Lines - Timeline

Insurers, brokers and others in the personal lines value chain are fighting against strong challenges on at least three different fronts.

Fierce competition on price through the direct channel has driven down market share for some brokers and impacted insurers’ profitability. Price comparison sites won’t go away, so Covea’s decision to join them by setting up its own aggregator is a bold move and one to watch for next year.

Insurers were not immune to job losses and restructuring as the financial crisis sent shockwaves through the City. As the dust settles a little, the potential for good size acquisitions at not over-inflated prices could prove to be a catalyst for deal-making. Deals already started to pick up earlier this year in personal lines, so it’s odds on for a lively M&A market in 2012.

While motor rates have hardened in the past 12 months due to rising personal injury claims, this increase slowed in Q3 2011. Overcapacity remains the underlying force, so there’s no guarantee the market has turned in a sustainable way.

One discernible trend that looks likely to continue, however, is a closer focus on quality business by insurers looking to bolster their operating ratio. Brokers that play at the riskier end of the market could find capacity becomes scarce.

April 2008: Rates stay low
The AA British Insurance Premium Index shows that widely predicted price hikes for home and motor after serious flooding are not being realised. Average premium for combined buildings and contents in Q1 2008 was down £4 to £293.

May 2008: Endsleigh goes online
Zurich-owned personal lines broker Endsleigh declares that its future is solely online as it announces the closure of 119 branches across
the UK.

September 2008: More Th>n founder steps up
Adrian Brown takes over as RSA UK chief executive, having set up More Th>n before becoming UK personal lines director, as Bridget McIntyre exits. The management reshuffle follows flat operating profits reported for the UK division in the first half.

December 2008: Lessons learned
Norwich Union (Aviva) promises to shrink the gap between its personal lines prices for brokers and the direct market, admitting that it had ‘lost its way’ on pricing during 2007.

May 2009: RSA raises cash
RSA issues £500m worth of bonds, with a view to paying back bondholders by the end of the year. Six months later in September it is poised to make a further £600m rights issue as it eyes acquisitions.

June 2009: Swinton’s clicks and bricks
New Swinton chief executive Peter Halpin outlines his “clicks and bricks” approach to personal lines distribution, committing both to high street branches and the web. Online sales account for 35% of new personal lines business.

November 2009: Iggy boosts Swiftcover
Iggy Pop helps to boost AXA-owned Swiftcover’s premium income by 45% in the first nine months of 2009. The ad featuring the ageing rocker attracts complaints from musicians and artists who claim it is misleading because Swiftcover refuses to cover artists because of their jobs.

May 2010: Jobs go at RBS
RBSI announces 2,000 job losses after posting a £50m Q1 loss. A further 600 posts become redundant at Direct Line later in the year as it unveils plans to close 14 out of 27 offices.

Brightside buys eBike and eCar
Broking group Brightside buys eBike and eCar for a total of £34.6m, comprising £15.5m up front and £19.1m depending on performance.
It has big-name insurers lined up to underwrite the products.

August 2010: Aviva rejects RSA bid
Aviva knocks back a £5bn takeover bid from RSA, saying that it wants to be “valued accordingly” for its market-leading position.

Ageas pays £200m for Kwik-Fit
Kwik-Fit is bought by Fortis (Ageas) for £215m, adding £89m revenue to the group’s existing £100m retail revenues.

September 2010: NIG cuts personal lines
NIG puts its estimated £300m GWP personal lines business into run-off, to the shock and disappointment of many brokers.

December 2010: Growth forecast
Personal lines is forecast a return to growth of 0.5% in 2010, reversing two years of declining GWP in 2009 and 2008. Datamonitor also expects that UK personal lines GWP will reach £29.2bn by 2014.

April 2011: Covea pays £70m for Provident
French mutual giant Covea completes the acquisition of Provident Insurance for £70m after an 18-month-long battle. The Yorkshire-based insurer was sold by GMAC in a bid to repay the US Treasury for its bailout. Covea owns Provident, MMA and Swinton in the UK, accounting for around 3% of the insurance market. Covea is poised to invest £20m in establishing a UK aggregator to rival the big four price comparison sites.

August 2011: Giles eyes CBG
Giles bids £5.1m in a reverse takeover of AIM-listed broker CBG.

September 2011: RBSI preps for sale
RBSI presents to analysts on 7 October in a move suggesting it favours a stock market flotation above a trade sale. The Royal Bank of Scotland must sell its insurance unit by 2013 under the terms of its 2008 bail-out by the UK government.