A good start for Groupama Insurances

01 September 2008

Robust profitability continues for first half of 2008

Profits stable at £15.0 million

Revenues rise 4.5% on same period in 2007

"Our performance over the first half of 2008 has been very sound and has continued to build on the strong foundations that we have set in place over the past five years. As usual, we have been focused sharply on our bottom line result. We expect the rest of the year to be testing and remain fully intent on retaining the underwriting and pricing disciplines that have served us so well."

François-Xavier Boisseau - CEO

Business highlights

UK profit and return on capital employed (ROCE)

Groupama Insurances generated profits of £15.0 million (post tax) to the end of Q2 2008 (2007: £15.1 million) producing a creditable return on capital employed of 22% on an annualised basis.

Half year revenues

Revenues rose 4.5% to £224.7 million (2007: £214.9 million). This reflects a robust performance from the personal lines portfolio whilst commercial lines and healthcare revenues remained under pressure as a result of highly competitive market conditions

Personal lines

Personal lines business is 9.5% ahead of 2007 at £123.6 million (2007: £112.9 million). This illustrates the company's continuing ability to identify niche opportunities in what are challenging trading conditions. In particular, there have been very good performances from the home and motorcycle accounts.
Although there is now some evidence of upward movement in private car rates, underlying claims inflation means that prices must continue to rise.

Commercial lines (including Fleet)

Market competition for SME business remains fierce with inadequate rating levels continuing – especially for new business where the market is still not demonstrating the necessary pricing discipline.

Given the unfavourable market conditions, Groupama has continued to focus on specialist niche schemes and growing its e-business activities. Optima Small Fleet, the company's online solution for SME fleets has seen strong development over the first half of 2008.

Total revenues eased back slightly to £54.7 million (2007: £55.4 million)

Healthcare

The market for smaller group business has remained very tough and against this challenging backdrop Groupama Healthcare has continued to concentrate on improving profitability with selective underwriting and disciplined pricing.

Half year revenues were stable at £46.3 million (2007: £46.5 million)

Commentary

François-Xavier Boisseau, CEO, Groupama Insurances

"We thought that 2008 would be a difficult year and nothing we have seen contradicts that view. Our performance has been very sound because we have the basics right and remained highly focused. Consistent profitability coupled with good customer service is key to success for Groupama."

"Although we are seeing some upwards movement in pricing in our motor business it is still being outstripped by claims inflation and by the impact of credit hire. We think that the market will need to continue with price increases for some while to restore profitability."

"Again our schemes business has helped us avoid the worst excesses of the market cycle in commercial insurance. The market remains very soft - especially for liability business - and whilst there is plenty of talk about rates moving up, at the moment it is really nothing more. It is however pleasing to see that the uptake of e-trading in commercial business is continuing. We have been at the cutting edge of this change and are well placed to reap the benefits as acceptance grows."

"Competition for smaller group healthcare business remains fierce and whilst we are continuing to win business in target areas, prices are currently far too low. We are focusing on profitability and will continue to walk away if we cannot get the correct price for the risk. At the same time we are beginning to develop our electronic trading capabilities and over the rest of the year we will be rolling out our ‘EasyAdmin' system to both reduce duplication and costs and enhance service for brokers."

"Already in 2008 Groupama Healthcare has been highly commended in the National Customer Service awards whilst we have also been short-listed in two categories at the European Call Centre Awards. This demonstrates a clear commitment to offering a top quality service."

"Given the current position in the market cycle these are a very satisfactory set of interim results that speak for themselves and illustrate again that for Groupama Insurances, it is the bottom line and not the top that will always take precedence."

ENDS
29th August 2008