Groupama’s pre-tax profits fell to £5.4m for the first half of 2009, compared to £13.1m for the same period last year.
François-Xavier Boisseau, CEO comments : “As we expected, the first half of 2009 has been very challenging and although the business has generally continued to perform very well, our profitability has suffered as a result of a combination of unprecedented claims inflation and some poor performing schemes affecting our core private car portfolio. As ever, we are always prepared to sacrifice volume to safeguard the bottom line and the underwriting and pricing action we have taken coupled with an improving rating environment is already applying the necessary correction. These changes should result in a stronger second half.”
Q2 Business Highlights
- Revenues – Groupama Insurances
In highly competitive market conditions, revenues for Q2 2009 were stable at £225.9 million (Q2 2008: £224.7 million). Private car income reduced significantly to correct profitability whilst commercial lines and PMI revenues remained under pressure as a result of a poor rating environment and fierce competition for SME business. There were strong performances from the household, motorcycle, fleet and PA and Travel portfolios.
- Profitability
Groupama Insurances generated pre-tax profits of £5.4 million for Q2 2009 (2008: £13.1 million) with profitability being impacted by a deterioration in the private car portfolio as a result of rising claims inflation and some unprofitable schemes. The private car account represents almost 30% of total revenues. The company delivered a positive and encouraging performance in all other business areas.
- Personal lines
A significant reduction in volumes in the personal motor portfolio to correct adverse profitability was balanced by impressive performances in both the company’s household, motor cycle and PA and Travel business following the development of a number of specialist scheme opportunities. Personal lines revenues remained flat at £141.8 million (2008 £141.2 million).
- Commercial lines (including Fleet)
The market for SME business remains extremely competitive with inadequate rating levels continuing especially in the open market where competitor rating for new business is still not demonstrating the necessary pricing discipline. Groupama has continued to focus on developing specialist schemes and building its e-business capabilities with significant enhancements to its extranet facilities coming on stream in Q2. Optima Small Fleet, the company’s innovative e-traded product for smaller fleets has again seen very encouraging growth over the first half of 2008. Total revenues moved up to £57.9 million (2008: £54.7 million)
- Private medical insurance
Groupama Healthcare continues to concentrate on enhancing profitability with selective underwriting and disciplined pricing and is beginning to reap the rewards in terms of results. The market for the smaller group private medical business (PMI) that is targeted by Groupama Healthcare has remained very challenging and PMI revenues eased back to £26.1 million (2008:£28.7 million) following the cancellation of a number of unprofitable schemes.
- Commentary
François-Xavier Boisseau, CEO, Groupama Insurances “As I predicted, 2009 has been very challenging for Groupama. The growing level of claims inflation that we have seen in our personal motor book over the first half of the year has been significant. This is as a result of the continuing impact of credit hire and aggressive claims farming activities by direct writers and some brokers that have continued to drive up the number of injury claims. We have responded strongly and I am comfortable that we will soon be back on track.” “With the exception of private car our business has performed very well and there have been some sparkling performances from our household, motorcycle and small fleet accounts where we are building a growing reputation for excellence. This bodes well for the future” “I remain very disappointed that the major commercial players are still not reacting to the wholly inadequate rating levels in the commercial market and that we are still seeing differential pricing for new business and existing customers. There has again been plenty of talk in the market over the first six months of 2009 about increasing rates but very little action. This needs to change.” “Our healthcare business remains stable and continues to provide a very real alternative to the products and services offered by the market leaders. We are making excellent progress with our electronic trading capabilities although remain very frustrated by the refusal of the market leaders in PMI to share claims information on SME business.”
