Legal & General (L&G) Group posted its 2017 financial results today, revealing a mixed bag for its insurance businesses.
General Insurance saw gross premiums increase 13% to £369 million, up from £326 million in 2016, which the insurer said was “despite the pressures of a competitive market and maintaining [its] pricing discipline.”
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However, combined operating ratio rose to 93% in 2017, compared to 89% the previous year, and operating profit fell from £52 million to £37 million year-on-year.
“This was primarily due to increased costs from non-weather related household claims in Q1 2017, predominantly escape of water, in line with wider market experience,” L&G said in a statement.
“Actions taken across pricing, underwriting and claims management have resulted in a 3% improvement in the operating ratio in H2 compared to H1, which we expect to return to previous levels in the coming years. In addition, ongoing work on streamlining internal processes and customer journeys will reduce time and cost associated with managing our business.”
L&G’s General Insurance direct business delivered gross premiums of £139 million in 2017, representing 15% growth on 2016, and now accounts for 38% of gross premiums.
The insurer said it is now ranked second for household new business via price comparison websites, which in total accounts for over half of UK direct household gross premiums.
“The General Insurance business has won seven distribution agreements in the last two years with major UK financial institutions, several of which will commence in H1 2018,” L&G said.
According to the insurer, the launch of its digital SmartQuote proposition in August – which enables customers to receive a quote in around 90 seconds by answering five questions – was a key factor in securing those distribution agreements.
“This has generated significant interest amongst potential partners leading to securing one deal with several others at advanced stages of discussion,” it said, adding that direct take-up has increased by more than 50% since the SmartQuote launch.
“In October 2017 we agreed to acquire Buddies Enterprises Limited, a pet insurance provider, which provides significant opportunities for growth in the pet market, thereby helping to diversify and expand our product range.
“We continue to attract significant interest from potential distribution partners, and are actively discussing a number of new opportunities including the very latest in insurtech.”
At Group level, Legal & General Insurance’s (LGI) operating profit from continuing operations was flat year-on-year at £303 million, while gross premiums went up 5% to £2.5 billion.
LGI UK delivered “robust profits” of £209 million, compared to £218 million in 2016.