Esure shares lose their grip as maiden results disappoint Square Mile

The motor insurer Esure, one of the City's highest-profile flotations this year, hit the skids yesterday after releasing its maiden set of results.

Shares in the owner of Sheilas' Wheels fell 65.5p, or 21 per cent, to 246p, below the 290p at which they were valued when the company floated in March. Esure's founder, Peter Wood, made £198m from the IPO.

The decline in the share price was prompted by disappointment over the company's first set of results since the IPO. Esure said it would pay an interim dividend of 2.5p, lower than some in the Square Mile had expected.

"The dividend was much lower than consensus," Eamonn Flanagan at Shore Capital said. "Given the uncertainty in the UK personal motor market, we remain negative on this whole sub-sector of the non-life market."

City experts said the shares had also been hit by fears of greater competition in the insurance sector, a point that Esure acknowledged yesterday by admitting it expected to take in fewer premiums from customers during the second half of the year.

Other observers said the company was being dragged down by wider industry concerns. Motor insurers face some of the toughest conditions for many years, as well as regulatory uncertainty including a review by the Competition Commission that will be published later this year.

The share fall came as the group increased its pre-tax profit by 15 per cent to £56.9m in the six months ending 30 June. Esure also posted an impressive combined ratio of 89.6 per cent, which means it is making a profit from its underwriting, and said the dividend reflected the fact that it had only been listed since the end of March.

Mr Wood said: "Our first interim results as a listed company show continued growth and profit growth with improvements in our combined ratio and underwriting performance.

"We have been listed for three months and are pleased to declare an interim dividend of 2.5p, representing a payout ratio of 70 per cent."

Last month, Esure's house broker, JP Morgan Cazenove, cut its profit and revenue forecasts for the insurer in view of regulatory proposals. Deutsche Bank, another City institution that worked on Esure's IPO, said yesterday it expected consensus forecasts for the company to fall by about 5 per cent.

Despite this, Hari Sivakumaran, an analyst at Oriel Securities, added: "We feel Esure's low-risk underwriting approach, high retention of existing policies and efficient cost base mean it is better placed than its peers to withstand competitive pressure."

Start your day with The Independent, sign up for daily news emails
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Retirement Coordinator - Financial Services

Negotiable: Recruitment Genius: To provide a prompt, friendly and efficient se...

Recruitment Genius: Annuities / Pensions Administrator

Negotiable: Recruitment Genius: You will be the first point of contact for all...

Ashdown Group: HR, Payroll & Benefits Officer - Altrincham - up to £24,000.

£18000 - £24000 per annum + benefits: Ashdown Group: HR, Payroll & Benefits Of...

Ashdown Group: Learning and Development Programme Manager

£35000 - £38000 per annum + benefits : Ashdown Group: A highly successful, int...

Day In a Page

The Last Word: Justin Gatlin knows the price of everything, the value of nothing

Michael Calvin's Last Word

Justin Gatlin knows the price of everything, the value of nothing
The saffron censorship that governs India: Why national pride and religious sentiment trump freedom of expression

The saffron censorship that governs India

Zareer Masani reveals why national pride and religious sentiment trump freedom of expression
Prince Charles' 'black spider' letters to be published 'within weeks'

Prince Charles' 'black spider' letters to be published 'within weeks'

Supreme Court rules Dominic Grieve's ministerial veto was invalid
Distressed Zayn Malik fans are cutting themselves - how did fandom get so dark?

How did fandom get so dark?

Grief over Zayn Malik's exit from One Direction seemed amusing until stories of mass 'cutting' emerged. Experts tell Gillian Orr the distress is real, and the girls need support
The galaxy collisions that shed light on unseen parallel Universe

The cosmic collisions that have shed light on unseen parallel Universe

Dark matter study gives scientists insight into mystery of space
The Swedes are adding a gender-neutral pronoun to their dictionary

Swedes introduce gender-neutral pronoun

Why, asks Simon Usborne, must English still struggle awkwardly with the likes of 's/he' and 'they'?
Disney's mega money-making formula: 'Human' remakes of cartoon classics are part of a lucrative, long-term creative plan

Disney's mega money-making formula

'Human' remakes of cartoon classics are part of a lucrative, long-term creative plan
Lobster has gone mainstream with supermarket bargains for £10 or less - but is it any good?

Lobster has gone mainstream

Anthea Gerrie, raised on meaty specimens from the waters around Maine, reveals how to cook up an affordable feast
Easter 2015: 14 best decorations

14 best Easter decorations

Get into the Easter spirit with our pick of accessories, ornaments and tableware
Paul Scholes column: Gareth Bale would be a perfect fit at Manchester United and could turn them into serious title contenders next season

Paul Scholes column

Gareth Bale would be a perfect fit at Manchester United and could turn them into serious title contenders next season
Inside the Kansas greenhouses where Monsanto is 'playing God' with the future of the planet

The future of GM

The greenhouses where Monsanto 'plays God' with the future of the planet
Britain's mild winters could be numbered: why global warming is leaving UK chillier

Britain's mild winters could be numbered

Gulf Stream is slowing down faster than ever, scientists say
Government gives £250,000 to Independent appeal

Government gives £250,000 to Independent appeal

Donation brings total raised by Homeless Veterans campaign to at least £1.25m
Oh dear, the most borrowed book at Bank of England library doesn't inspire confidence

The most borrowed book at Bank of England library? Oh dear

The book's fifth edition is used for Edexcel exams
Cowslips vs honeysuckle: The hunt for the UK’s favourite wildflower

Cowslips vs honeysuckle

It's the hunt for UK’s favourite wildflower