Aviva has 'no plans' for major rate hikes despite €100m weather claims
AVIVA has no plans to make any "significant" changes to its general insurance premiums despite suffering a sharp fall-off in profitability over the first half of the year.
The UK plc yesterday revealed a 66pc collapse in operating profits at its Irish general insurance business, as half-year operating earnings came in at £47m (€57m) on premiums of £240m.
The division's underwriting performance was worse, with losses of £12m recorded on core general insurance activities in the 2010 half-year against profits of £15m a year earlier.
In a statement, Aviva Ireland blamed €100m in freak weather claims from "winter 2009/2010" for the poorer performance at Ireland's largest general insurer.
Aviva plc's stock market statement also cited "aggressive and unsustainable pricing by competitors" as a factor that was "exacerbating" difficulties in the Irish general insurance market.
The commentary surprised some observers, since the administration of Quinn Insurance was believed to have curbed the downward pressure on general insurance premiums.
"Aggressive pricing was an issue over the first half of the year, but we've probably seen less of that recently," Aviva Ireland chief executive Jim Dowdall said yesterday, adding that rates were "hardening".
Yesterday's figures show underwriting profits at Aviva's motor business fell from £23m to £15m in the first half of the year, while the household book suffered an underwriting loss of £27m against a loss of £8m a year earlier.
The loss on the household book is understood to be linked to the weather costs, although just a third of the €100m was booked in 2010, with the rest accounted for in 2009's claims pile.
Mr Dowdall said Aviva "took action" on its general insurance rates in 2009 and early 2010. "We'll always monitor rates, but there's no intent to have a look at any significant rating action later in the year," he said.
Aviva's health and life insurance businesses put in more buoyant performances over the first six months, with both divisions enjoying higher revenues and profits.
The health division recorded an underwriting result of £7m for the 2010 half-year against underwriting profits of £1m a year earlier, as premium income grew from £23m to £32m.
Life insurance new business sales rose by almost 12pc to £476m on an absolute basis, helped by a 19pc surge in sales through Aviva's bancassurance channels.
Mr Dowdall said new investment products and protection were both performing strongly.
New business margins contracted from 0.9pc to 0.2pc, but the life insurance division still ended the year ahead after £55m of funds was released from reserves.
That £55m boost pushed Aviva Ireland's overall profit to €115m, up 40pc on the previous year.
"The scale of Aviva means that we're able to pay weather claims of €100m and still deliver a set of results like this," Mr Dowdall said.