RBS 2005 Annual Report Download - page 81

section
01
Operating and
financial review
79
Operating and financial review
Annual Report and Accounts 2005
RBS Insurance
Pro forma
2005 2004
£m £m
Earned premiums 5,641 5,561
Reinsurers’ share (246) (455)
Insurance premium income 5,395 5,106
Net fees and commissions (449) (485)
Other income 543 460
Total income 5,489 5,081
Expenses
– staff costs 323 307
– other 413 345
736 652
Gross claims 3,903 3,815
Reinsurers’ share (76) (267)
Net claims 3,827 3,548
Contribution 926 881
31 December 31 December
2005 2004
In-force policies (000’s)
– Motor: UK 8,687 8,338
– Motor: Continental Europe 1,862 1,639
– Non-motor (including home, rescue, pet, HR24): UK 10,898 10,464
General insurance reserves – total (£m) 7,776 7,379
RBS Insurance produced a good performance in 2005, with
total income increasing by 8% to £5,489 million and
contribution by 5% to £926 million. The integration of Churchill
was completed in September 2005, ahead of plan, and
Churchill delivered greater transaction benefits than
anticipated at the time of the acquisition. Following the
integration of Churchill, all our direct businesses in the UK now
operate on a common platform.
RBS Insurance achieved 4% growth in UK motor policies in
force. In achieving this against a background of very strong
competition in UK motor insurance, we benefited from the
strength of our brands and the diversity of our distribution
channels. Growth came through our direct brands, through our
partnership business, where we operate insurance schemes
on behalf of third parties who in turn sell insurance products
to their customers, and through NIG, our intermediary business
acquired as part of Churchill. Our businesses in Spain,
Germany and Italy together delivered 14% growth in motor
policies in force. Linea Directa, our joint venture with Bankinter,
increased its customer base by 17% and, with more than 1
million policies, is the largest direct motor insurer and sixth
largest motor insurer in Spain.
Total home insurance policies declined by 1%. Within this total,
we continued to expand through our direct brands but there
was attrition of some partner-branded books.
In addition to expanding its intermediary business in motor and
home insurance, NIG achieved 10% growth in commercial
policies sold to SMEs.
Expenses rose by 13%. Excluding the impact of a change in
reinsurance arrangements, total income rose by 5% and
expenses by 4%. Net insurance claims on the same basis were
up by 5%, reflecting increased volumes, claims inflation in
motor and an increase in home claims following severe storms
in the UK in January 2005.
The UK combined operating ratio for 2005 was 93.6% (2004 –
93.3%).