A number of insurers have now released their results for 2024, and the general trend is one of strong premium growth and improving underwriting profitability.
Aviva’s UK insurance chief executive Jason Storah may have described the insurer’s growth last year as “appropriate, consistent and disciplined” but a 16% increase in gross written premium (GWP) combined with a 1.9 percentage point improvement in its undiscounted combined operating ratio (COR) to 94.9% represents a not-so-insignificant improvement.
This growth means that Aviva now commands some £7.7bn in GWP, and its acquisition of Direct Line Group (DLG) – which will be put to a shareholders vote on 10 March – will lead to UKGI’s first £10bn insurer.
However, integrating its latest acquisition will be no small task for Aviva, despite DLG’s return to underwriting profitability, as announced by chief executive Adam Winslow in its 2024 results.
Both insurers have consistently ranked in the top five largest insurers in the market, and combining two businesses of such magnitude will be no mean feat. Aviva will, however, be hoping that the merged businesses will be able to benefit from efficiency savings following the deal.
This will be particularly important with DLG’s expense ratio having been higher than the market aggregate for a number of years now, according to our analysis of Solvency and Financial Condition Reports (SFCRs), a position that will already be improving following the £100m of cost savings planned by the end of 2025 as part of Winslow’s DLG turnaround plan.
Many of the market’s other leading insurers have also been reporting improved performance for 2024, with Allianz UK reporting a 5.5% increase in revenue to £4.7bn and a 1.9 percentage point improvement in its COR to 95.0%.
Hiscox, meanwhile, reported a 5.8% increase in insurance contract written premiums – a measure akin to GWP but adjusted for IFRS17 reporting standards – while the COR for Hiscox Retail improved to a highly profitable 88.9%.
One insurer to buck the trend, however, was AXA UK. While the insurer did not release full results for the UK, it did reveal that growth at group level had been “partly offset by lower volumes in the UK and Ireland and Germany, primarily in H1 2024”.
But despite these improving fortunes, the market continues to be dogged by a number of pressures, with claims inflation continuing to apply downward pressure on profitability.
Much of this has been offset by rising premiums in recent years as the hard market helped to alleviate much of this pressure, delivering profitable growth for many across the industry.
But with rates now softening across many markets – and regulation continuing to add a considerable burden – will these good fortunes continue? Or will rising CORs return to the market as premiums fall?