Premium income falls 10% at CGU
Thursday 13 May 1999
CGU has been raising rates, hoping the rest of the industry will follow suit, at the cost of a temporary loss of market share.
Private motor insurance premiums have risen by 15 per cent on the first quarter last year, while commercial motor rates rose 18 per cent. Now household insurance is also rising, up by 6 per cent from last year.
CGU executives say they are confident rivals have also begun to raise rates, providing relief from the deep slump in the insurance cycle which has devastated insurers' profits for the past two years.
Bob Scott, CGU group chief executive, said: "There is quite a lot of evidence that we are hitting the bottom of the insurance cycle. There is a lot of capital that came into the market and has enjoyed good returns for years, which is now beginning to realise the market is under pressure."
The group has also taken action to limit its unquantifiable exposure to claims stemming from the year 2000 computer bug. Exclusion clauses have been introduced to annually-renewable policies, driving some customers to look elsewhere.
In spite of the loss of premium income, CGU's underwriting profits were sharply up in comparison to a stormy three months at the start of last year, when a Canadian ice storm and floods at home led to a dramatic rise in claims.
Operating profit before tax was up pounds 22m to pounds 188m before exceptionals, helped by a boom in demand for life and savings in the first quarter of the year.
Shares rose 2.7 per cent in a falling market yesterday to close at 913.5p. Investment boutique Fox-Pitt Kelton says that is a 37 per cent premium to the value of net assets, compared with a 20 per cent premium for rival Royal & SunAlliance. CGU looks comparatively undervalued; buy.
- 1 Nigel Farage: Me vs Russell Brand on Question Time – he's got the chest hair but where are his ideas?
- 2 Harry Potter fans can apply to the Hogwarts-inspired College of Wizardry
- 3 Jessica Chambers: 19-year-old woman 'doused with lighter fluid and burned alive' in the US
- 4 Russell Brand calls Nigel Farage 'poundshop Enoch Powell' in BBC Question Time debate
- 5 Orange Wednesdays are no more
Weather bomb in pictures: Storms cuts power for tens of thousands – and snow is on the way
Jessica Chambers: 19-year-old woman 'doused with lighter fluid and burned alive' in the US
Russell Brand calls Nigel Farage 'poundshop Enoch Powell' in BBC Question Time debate
Russell Brand was rendered speechless on Question Time by this man
Fury at Airbus after it hints the super-jumbo may be mothballed
Disgruntled RBS worker writes hilarious open letter to Russell Brand after anti-capitalist publicity stunt leaves him hungry
Shock poll shows voters believe Ukip is to the left of the Tories
Nigel Farage's approval rating hits 'record low' as popularity suffers in wake of Ukip sex scandal
Nigel Farage defends Kerry Smith 'ch***y' comment: 'If you are going for a Chinese, what do you say you’re going for?'
Ukip candidate jokes about 'shooting peasants' in racist and homophobic rant
Pakistan school attack live: Taliban kill at least 132 children in 'horrifying' massacre
iJobs Money & Business
$200 - $350 per annum: Carlton Senior Appointments: Managing Producer Office...
$125 - $225 per annum: Carlton Senior Appointments: San Fran - Investment Advi...
Up to £70,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...
Up to £65,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...