RBS 2008 Annual Report Download - page 66

65RBS Group Annual Report and Accounts 2008
For RBS Insurance as a whole, insurance premium income, net of fees
and commissions, was broadly maintained at £4,892 million, reflecting
7% growth in the Group’s own brands offset by a 10% decline in the
partnerships and broker segment. Other income declined by 8% to
£674 million, reflecting the effect of depressed financial markets on
investment income.
Direct expenses grew by 4% to £771 million, in part as a result of
accelerated marketing development in own brands, including the launch
of Direct Line for Business.
Net claims fell by 7% to £3,733 million, benefiting from ongoing claims
containment and more benign weather conditions. Impairments of
£42 million reflect impairments recognised in corporate bond and
equities investment portfolios.
The UK combined operating ratio for 2008, including manufacturing
costs, decreased to 93.8% from 98.0%.
Strategic review
The Group has decided to retain RBS Insurance, reflecting the strength
of its franchise as the leading UK personal lines insurer. It provides high
quality earnings, which are differentiated from the Group’s banking
businesses, providing valuable diversity and strong returns. The
business plans to pursue additional growth opportunities through
building its position in the online insurance aggregator channel, through
the bank channels and in the commercial market. The business retains
competitive advantage through its market leading brands, low cost
operating model and the benefits of scale on its claims costs.