The insurance company reported a 1.3% increase in gross written premiums for its ongoing operations over the first nine months of its financial year. Motor gross written premium increased by 4.1% compared to the same nine month period of 2014. Own brands performed well with strong retention overall and increased sales, particularly on price comparison websites from its Churchill brand. The share price rose marginally in early UK stock market trading.
For the Home insurance business, gross written premiums proved to be 4% lower than for the first nine months of 2014, primarily due to partnerships which were 5.2% lower, while own brands experienced a smaller reduction of 2.7%. The insurer highlighted that Home's strong brands maintained their competitiveness in a deflationary market supported by previous investments in pricing and claims management initiatives.
Total in-force group wide policies for ongoing operations during the period reduced by 1.1% to 16.1 million. A reduction in in-force policies for other personal lines of 3.5% since the start of the year primarily reflected lower packaged bank account volumes. More favourably, total group costs for ongoing operations were cut by 7%.
Chief Executive Comment:
"Our strategy is progressing well and we continue to see the benefits of our programmes to improve customer experience and differentiate our brands, with a strong performance in Motor helping us deliver overall growth in our gross written premium. At the same time, we have also realised further efficiencies throughout the business, with costs reducing."
Management noted that "The Group's markets remained highly competitive in the first nine months of 2015. The motor market overall has seen price rises, but this should be viewed in the context of rising claims costs. Deflation in the home market has continued, while competition was stronger in the rescue market in the third quarter."
The Group reiterates its expectation to achieve a combined operating ratio for 2015 in the range of 92% to 94% for ongoing operations - the combined operating ratio expresses costs and claims expenses as a proportion of premium income, and is a key measure of underwriting profitability. A reading below 100 equates to a profit.
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