Cox Insurance, which this week revealed it was in talks to take over its rival Highway, yesterday said it had enjoyed the best year in its history as the proliferation of speed cameras had helped to make motorists become safer drivers.
The motor insurer, which pulled out of its commercial business after heavy losses from the 11 September attacks, said profits before tax were up 22 per cent to a record £52m, under-writing profits were up 33 per cent to £52.7m, and dividend payments have been resumed.
Motor insurance is now the group's core focus, and Cox yesterday said its combined operating ratio - a measure of claims as a proportion of premiums - was 86 per cent.
"We had 15 per cent fewer claims this year. Motorists are becoming much safer drivers - their behaviour is changing as all these speed cameras and penalty notices take effect. They make people drive slower and have fewer accidents," Neil Utley, the chief executive of Cox, said, adding that this was a long-term trend in motoring.
Mr Utley, who led an abortive attempt to buy out the company last year, said the premium levels in motor insurance were holding up well. Many analysts had expected rates to fall, but Mr Utley said consolidation in the motor insurance market had propped up rates, and it has already taken market share to become the number seven motor insurer in the UK.
The company declined to comment further on the possible takeover of Highway. It, too, has undergone restructuring, abandoning the Lloyd's market entirely to cut down on expenses. An all-share takeover is at present being discussed, and the deal could be worth more than £75m.
Cox's broking arm took a hit from the liquidation of Tribune Risk and Insurance Services, an insurance agent that collapsed in December last year. It was supposed to place cover with authorised insurers, but had not, leaving thousands of customers without insurance. Cox has suffered losses of some £6.5m from exposure to the company, but yesterday said this would be the full extent of the damage.
It also began a three-year cost reduction programme to take £15m out of the business, which it said yesterday was on track.
Cox shares yesterday closed up 2p at 88.5p
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