Esure Esure on track to deliver at the positive end of 2017 guidance
Raising prices and a 40% increase in trading profit from the motor segment (£41.8m ($55.4m)) helped to drive Esure's H1 2017 pretax profit from continuing operations up 44.6% YoY to £45.1m. The group's interim results showed year-on-year increases in gross written premiums (22.8% to £393.3m) and in-force policies (8.8% to 2.258 million). Its combined operating ratio rose 2.6 percentage points to 96.6% and its solvency II capital ratio was 153%. The interim dividend rose from 3p to 4.1p per share, reflecting a payout ratio of 70% of EPS, including a 20% special dividend. Esure's motor reinsurance bill rose 33% (like-for-like) - £10 per vehicle - when it renewed on 1 July, due to the reduced Ogden discount rate. No material changes were noted around the renewal of its home insurance programme.


 

Esure’s motor reinsurance bill went up 33% on a like-for-like basis when its programme renewed on 1 July, the company revealed in its first-half results.

The increase was caused by the cut to the Ogden discount rate.

The industry is expecting Ogden to drive a large motor excess-of-loss reinsurance rate increase when programmes come up for renewal, with talk of 100% rate rises. Most UK motor programmes renew on 1 January, but some renew on 1 July.

Esure said its 33% increase equates to £10 a vehicle. The company said: “The increase in reinsurance costs compares favourably to market estimates and reflects the group’s low risk approach to underwriting, low large loss propensity and strong, long term relationships with its reinsurer panel.”

It added: “The group has successfully implemented price increases across its motor portfolio in the first half of the year to help mitigate against the increased cost of reinsurance.”

The company said its home reinsurance programme also renewed on 1 July, but there were “no material changes” to that programme.

Esure chief executive Stuart Vann said: “I am really pleased with the outcome of our reinsurance renewal on 1 July which is testament to our focused underwriting approach and strong relationships with our reinsurance panel.

“As indicated earlier in the year, we have increased prices in the first half of the year which mitigate this increased cost to the business, whilst continuing to grow.”