50% fall in profits for Lloyds TSB

Lloyds TSB Insurance saw profits fall by nearly 50% for last year in the wake of January’s storms and the summer floods.

The division achieved pre-tax profits for 2007 of £128 million, compared to £243 million in 2006.

The January storms cost the business £12 million, whilst the summer floods in June and July cost a total of £101 million.

When adjustments for extreme weather related claims are taken into account, the underlying claims ratio saw an improvement in 2007. This reflects adjustments that were made to home insurance underwriting and improved claim processing efficiencies.

However, when the extreme weather related claims are included, the claims ratio for all underwritten lines of business rose in 2007 to 49% compared to 32% in 2006. The combined ratio in 2007 hit 93%, up from 80% during 2006.

Llyods TSB say that in spite of these set backs, the business saw strong sales growth for the year, with an 8% increase in total new business GWP (gross written premiums) and a 14% increase in home insurance new business GWP.

SME insurance sales also grew by a substantial amount, seeing GWPs rise by 99% compared to 2006. This growth was propelled by a sustained drive for extra sales through the bank’s Wholesale and Investment Banking division, and by the acquisition of the SME commercial business from Pearl.

Managing directorof Lloyds TSB Insurance, Phil Loney, said of the results: “Our focus on providing an excellent service to customers is also helping to drive strong sales of home insurance through our branch network as customers recognise the importance of good quality cover.

“In 2008 we will continue to focus our activity on developing new insurance propositions for the different personal and commercial customer segments within the Lloyds TSB customer base.

“We also expect to further expand our corporate partnerships business as our ability to work with partners to build new insurance revenue streams is proving popular in the market.

“On the supply side of our business, we remain focussed on leveraging further benefits from the substantial investment we have made in new claims and pricing technology over the last three years, and on ensuring that we control the right parts of the value chain for our broked business.”

Category: Insurance News, Lloyds TSB Insurance News