Insurers' first-half results mixed

The five leading UK insurers, although all suffering, showed the resilience of their business models despite one of the worst years for the UK economy in decades and all insurer chief executive officers insisting that premiums need to rise. Some are clearly in much stronger positions than others in the downturn.

Zurich saw its premiums dip in the UK by 16% to £900m while Aviva's fell 21% to £2.050bn. Aviva's chief executive officer, Igal Mayer, said that much of the reduction was deliberate because the company had pulled out of accounts with Primary, Saga and Towergate.

However, it must be worse than expected because the insurer managed to upset many brokers earlier in the year by raising rates and reducing commissions at the same time. Aviva made some changes to its approach midway through the year but it is still set to lose £1bn net written premium by the end of 2009. Profits were relatively stable, with a reduction in reserve releases as the surplus from the benign years of 2004 and 2005 ran out.

Allianz's commercial business grew in the first half of this year, partly as a direct result of its decision to underwrite half of Towergate's Fusion book, which placed approximately £40m of business in the first half of the year. Commercial premiums grew from £495.6m [H1 2008] to £532.9m, with the combined ratio going in the wrong direction from 88.1% to 91.8%. However, its retail operation improved to 100% from 107.1%, with premium declining from £306.4m to £292.1m. Chief executive officer Andrew Torrance has produced consistent results and expects more of the same for the second half of the year.

Axa

Axa has had a more troubled time than its German-owned rival, losing 10% of its overall commercial business in the first half. This shrinkage saw liability down 24%, commercial motor down 8% and property down 4%. General insurance premiums were down 4% to £1.064bn, with creditor down 29% and travel dropping 20%. For the UK and Ireland, including health, total general insurance earnings declined 43% to £77m from £135m in the first half of 2008, with the combined ratio slipping from 98% to 100%. Axa blamed the result on costs of £32m due to adverse weather in the UK and Ireland, as well as a large insurance commercial property loss and lower investment returns. Chief executive officer Philipe Maso has had to make some tough decisions and has undertaken a bold strategy to pull out of managing general agents such as Primary.

RSA

RSA had another steady first half, claiming that it had managed to increase rates in many lines, including 7% in liability, 9% in commercial motor and 4% in household. Adrian Brown, chief executive officer at RSA UK, told sister title Post: "The commercial mid-market remains an area for us to focus on. The UK motor market is also a challenge and we have increased our claims initiatives, such as fraud prevention." The firm is stepping up its reach in the mid net worth market with online system Selfsure that, according to RSA, allows brokers to set their own commission levels on a policy-by-policy basis by combining home, motor, classic car and travel in a single policy.

Although a mixed bag of results for the UK's leading insurers, given the large number of job losses across these firms over the last year, we hope they are now in good shape for the future. It would also be helpful if they could make a more concerted effort to push up rates.