This time last year, esure (ESUR) raised a few eyebrows by forecasting gross written premium growth in 2016 of 10-15 per cent and a 4-6 per cent growth in policy numbers. This looked to be a hard ask, but in fact the motor and home insurer's gross written premiums rose by 19 per cent, while in-force policies were up by 8.6 per cent at 2.17m. The dividend is up, helped by a capital boost from the GoCompare.com (GOCO) demerger, and the latter business is also progressing well thusfar.
An additional 12 segments were launched on the motor insurance side, which means the company can now offer quotes on 70-80 per cent of the motor market without taking any material increase in risk. Significantly, this will enhance its target of reaching 3m in-force policies by 2020. Premiums improved on the motor side, but the home market remained a challenge, with fierce competition driven by price comparison websites. Profitability was also dented by adverse weather at the start of the period.
An adverse change in the Ogden discount rate - used to calculate injury payouts - from 2.5 per cent to minus 0.75 per cent, was mitigated by the group's reserve margin, which included an allowance for a change in the rate to zero.
Deutsche Bank forecasts pre-tax profit for 2017 of £89.2m and EPS of 18p (from £73m and 14.8p in 2016).
ESURE (ESUR) | ||||
---|---|---|---|---|
ORD PRICE: | 239.8p | MARKET VALUE: | £1bn | |
TOUCH: | 239.7-240p | 12-MONTH HIGH: | 245p | LOW: 168p |
DIVIDEND YIELD: | 5.6% | PE RATIO: | 4 | |
NET ASSET VALUE: | 65p | COMBINED RATIO: | 98.8% |
Year to 31 Dec | Gross premiums (£) | Pre-tax profit (£m) | Investment return (£m) | Dividend per share (p)* |
---|---|---|---|---|
2012# | 515 | 116 | 67.9 | nil |
2013 | 526 | 118 | 45.5 | 15.8 |
2014 | 518 | 103 | 42.9 | 16.8 |
2015 (restated) | 550 | 60.9 | 36.3 | 11.5 |
2016 | 655 | 72.7 | 55.7 | 13.5 |
% change | +19 | +19 | +53 | +17 |
Ex-div: 13 Apr Payment: 26 May #Prior to flotation *Includes special dividends of 3.9p in 2016, 3.3p in 2015, 6.9p in 2014 and 6.5p in 2013 |