RBS 2011 Annual Report Download - page 29

RBS Group 2011 27
Serving customers well
Whether it's a major flooding event, a snow
storm in winter, an earthquake or an erupting
volcano, our combined efforts make us experts
in dealing with crises. Last year we were on
the ground in Tottenham just a few days after it
was hit by the riots to share our expertise with
those in need, and we made sure, via
constituency MPs, that those affected in other
areas knew the best way to submit their claims.
We are transforming how we handle
customers’ claims. We have a new claims
system which will help to capture and process
enhanced information about the claim,
enabling a more pro-active process of
management and settlement for customers.
This multi-million pound investment will take
place over three years. Already, we are
processing all Churchill home claims, and
motor claims for Direct Line, Churchill and
Privilege on the new system.
We signed a five-year deal with Sainsbury’s
Finance, marking a significant new partnership
for us, to provide underwriting, sales, service
and claims management for their car
insurance customers.
We also concluded a deal with Nationwide
Building Society which will see our contract for
the provision of home insurance expand to
include post-sales service and claims
management.
We launched Select from Direct Line, which is
a new product for customers who need higher
levels of cover for their home insurance. It was
also our first product in the premium segment
of the market. After the launch of Select from
Direct Line, we also began providing premium
home, motor and travel insurance for the
clients of Coutts & Co.
NIG, our commercial broker business,
increased its gross written premium by 4%
compared with 2010. They also unveiled a new
brand identity, which underpinned the work
they have done to improve their product
offering and service to brokers within their key
segments. Direct Line for Business, our direct
SME insurer, continued to perform well,
achieving 100,000 policies for its residential
property owners’ product.
We also serve our customers by campaigning
on important issues. During the year, we:
•continued our work with Brake, the road
safety charity, and commissioned reports
which we hope will reduce road deaths and
injuries;
•sponsored Brake’s Parliamentarian of the
Year Award for MPs who campaign on road
safety; and
•continued to campaign for higher fines for
uninsured drivers.
Building sustainable value
We remained the largest personal lines motor
and home insurer in the UK, all built around
strong brands such as Direct Line, Churchill
and Privilege and we continued to provide
support and reassurance to millions of UK
motorists through our Green Flag breakdown
recovery service. Direct Line Italy is also now
the number one direct insurer in the country,
partly assisted by the first full year of its sales
agreements with FGA Capital, a joint venture
between Fiat and Credit Agricole.
We continued to enhance our efficiency:
•combining our four legal underwriting
identities into one;
•exiting seven more sites, bringing our total
exited to 15 since 2010; and
•restructuring our Green Flag rescue service,
enabling members to benefit from greater
visibility of the Green Flag brand on UK roads.
Operating profit rose by £749 million in 2011,
principally due to the non-repeat of the bodily
injury reserve strengthening in 2010, de-
risking of the motor book, exit of certain
business segments and more benign weather
in 2011. Gross written premium fell by 5% as
we reduced volumes in unattractive markets.
Our return on equity was 10.3% compared
with a loss of 6.8% in 2010.
We continued to make good progress on plans
to divest from the RBS Group, in line with the
obligation to meet the European Commission’s
divestment deadline. This includes preparing
the standalone systems and functions that will
be required as a separate business.
Paul Geddes
Chief Executive,
RBS Insurance
Performance highlights 2011 2010
Net premium income (£m) 3,969 4,311
Net claims (£m) (2,772) (3,932)
Operating profit/(loss) (£m) 454 (295)
Combined operating ratio (%) 100 121
Return on equity (%) 10.3 (6.8)
Divisional review
RBS Insurance