Esure (ESUR) maintained its hectic rate of expansion in the six months to June, with gross written premiums in the motoring division up more than a quarter at £351m. In-force policies grew by 16 per cent to 1.74m for motoring, and the combined operating ratio – that's claims and expenses as a proportion of income – improved from 97.9 per cent to 95.3 per cent.
The rise in premiums came through a combination of higher policy numbers and a rise in premium rates. The latter was more enough to offset claims inflation, leaving the net loss ratio better at 72.6 per cent from 76.4 per cent a year earlier.
Competition remained intense on the home insurance side, and esure resisted the temptation to chase unprofitable business by maintaining strict underwriting discipline. As a result of this, gross written premiums were down 6 per cent at £42m and there was still an underwriting loss of £2m, although non-underwriting services such as administration fees and instalment income prospered.
In home insurance, competition means that there remains a soft rating environment despite claims inflation, a situation that chief executive Stuart Vann thinks cannot continue indefinitely. Investment income fell from £6.1m to £5.7m, equating to a gross investment return of 0.9 per cent, down from 1 per cent a year earlier.
Analysts at Peel Hunt are forecasting adjusted pre-tax profits for the year to December 2017 of £94.3m and EPS of 17.5p (from £71.2m/14.7p in 2016).
| ESURE (ESUR) | ||||
| ORD PRICE: | 297.8p | MARKET VALUE: | £ 1.24bn | |
| TOUCH: | 297.4-297.8p | 12-MONTH HIGH: | 309p | LOW: 177p |
| DIVIDEND YIELD: | 4.5% | PE RATIO: | 18 | |
| NET ASSET VALUE: | 64p | COMBINED RATIO: | 96.6% | |
| Half-year to 30 Jun | Gross premiums (£m) | Pre-tax profit (£m) | Investment return (£m)** | Dividend per share (p) |
| 2016 | 320 | 31.2 | 24.6 | 3 |
| 2017 | 393 | 45.1 | 27.7 | 2.9* |
| % change | +23 | +45 | +13 | -3 |
| Ex-div: | 31 Aug | |||
| Payment: | 13 Oct | |||
| *Excludes special dividend of 1.2p a share **Includes instalment interest | ||||
