Esure — FY2021 Earnings Presentation
22 slides from Esure's earnings presentation, March 2022
Slide 1: 2021 Results Update
2021 Results Update March 2022
Slide 2: Table of Contents
Table of Contents 1 Headlines and Strategic Priorities 3 2 Financial performance 8 3 Risk Profile & Balance Sheet 13 2
Slide 3: Headlines and Strategic Priorities
1 Headlines and Strategic Priorities 3
Slide 4: esure at a Glance
esure at a Glance Focused UK personal lines insurer Operating under two main brands, with a third Strong customer proposition brand available for test and learn In-force Policies 2.54m +3.4% Net Promoter Score Trading 58 profit £83.5m +1.1% 56 Specialists in digital distribution Across Price Compari
Slide 5: esure's Ambition and Strategy
esure’s Ambition and Strategy esure’s ambition is to become the leading scale pure-play digital insurer in the UK, executed through four pillars of the Game Changer strategy Strategic focus What we do How we share value with our stakeholders Digital Leadership • Great value products • Our Customer –
Slide 6: esure's Game Changer Approach to Digital Leadership
esure’s Game Changer Approach to Digital Leadership Pricing leadership to build scale in Modern, scalable, cloud Motor PCW native technology • Advanced data science • Leading agility and speed of execution • High-velocity retail trading culture • Sophisticated data & AI capability • Mass-market reac
Slide 7: A Dynamic Market Environment
A Dynamic Market Environment • Road traffic returned towards pre pandemic levels following the first half of 2021 when they were c.25%(1) down on pre-covid levels. Pricing and Claims • CLA Whiplash reforms were introduced across the industry from May targeting reductions in personal injury environme
Slide 8: Financial performance
esure GROUP (2) Financial performance
Slide 9: Financial Performance
Financial Performance The Group is well positioned to drive value and is looking to do so by focusing on Growth, Quality and Returns Financial Performance Highlights Active and disciplined approach to trading, seeking a balance between profitability and customer growth 2021 vPY In-Force Policies (m)
Slide 10: Financial Performance Highlights: Growth
Growth Financial Performance Highlights Highlights 2021 vPY In-Force Policies (m) 1.93 +3.1% • Steady IFP growth, driven by new business • Soft market rates impacted motor gross written premium and Gross Written Premium (£m) 701.5 -4.8% turnover Turnover (£m) 788.9 -4.1% • Pricing and underwriting o
Slide 11: Financial Performance Highlights: Quality
Quality Financial Performance Highlights Highlights 2021 vPY Net Loss Ratio 73.6% +3.7pts • Strong focus on underwriting integrity across both Motor and Home - Current Year 80.8% +5.1pts • Motor claims frequencies increased returning closer to pre - Prior Year -7.2% -1.4pts pandemic levels in H2 • S
Slide 12: Financial Performance Highlights: Returns
Returns Financial Performance Highlights Highlights 2021 vPY Trading profit (£m) 83.5 +1.1% • Improved Home profitability and lower central costs offset pressure on Motor profitability - Motor 106.9 -15.8% - Home 18.8 >100% - Central -42.2 -5.2% Profit After Tax (£m) 7.7 -73.4% • Lower Profit after
Slide 13: Risk Profile & Balance Sheet
3 Risk Profile & Balance Sheet 13
Slide 14: Low Risk Investment Portfolio
Low Risk Investment Portfolio Conservative approach to asset allocation… …supplemented by well-managed credit risk Deposits with BBB credit 16% Below BBB or institutions not rated Debt 23% 11% securities 64% A Investments Cash 23% 7% bearing credit risk AAA Total investments 20% and cash and cash £1
Slide 15: Conservative Reserving Approach
Conservative Reserving Approach Accident Year Ultimate Net Loss Ratio Development Over Time(1) % of Ultimate Accident Year Net Earned Premium 86% 85% 84% 83% 84% 81% 78% 79% 75% 76% 72% 75% 69% 67% 64% 65% 62% 58% 2012 2013 2014 2015 2016 2017 2018 2019 2020 End of Reporting Year +1 year +2 years +3
Slide 16: Comprehensive Reinsurance Programme
Comprehensive Reinsurance Programme 3 Pillars of Reinsurance Protection: 1 • Reduces capital intensity through risk-sharing with reinsurance Significant Risk-Sharing via Quota Share partner Quota-Share as % of Earned Premium(5) • Supportive for ROE as esure retains 100% of higher margin 30% 40% Quot
Slide 17: Solid Solvency II Position
Solid Solvency II Position Group solvency coverage significantly above the target range Low Sensitivity to Market Risks Group Solvency II Ratio Sensitivities, % Motor loss ratio 5ppts worse (12%) 164% 188% 1987 Hurricane (8%) Real estate values -25% (3%) Target Range: 126 140% - 160% Credit spreads
Slide 18: Appendix
Appendix 18
Slide 19: Financial Performance: 2021 Annual Report & Accounts
Financial Performance: 2021 Annual Report & Accounts Year ended 31st Dec • Gross Written Premium decreased 4% as a result of soft market £m 2021 2020 conditions Gross Written Premium 807.6 841.0 Net Earned Premium 443.2 521.5 • Instalment interest income and other income contributed a Investment Inc
Slide 20: Financial Performance: 2021 Annual Report & Accounts
Financial Performance: 2021 Annual Report & Accounts Year ended 31st Dec £m 2021 2020 Goodwill and intangible assets 28.7 34.7 • Borrowings related to £125m 10-year subordinated notes that Deferred acquisition costs 56.0 53.1 were issued by the Group on 19 December 2014 at the rate of Property, plan
Slide 21: Glossary of Terms
Glossary of Terms Turnover includes gross written premiums, income from instalments, and other income net of the reinsurance profit share. This measure is used by management to show the scale of the Group. Net Revenue includes net earned premiums, income from instalments, net investment return and o
Slide 22: Disclaimer
Disclaimer IMPORTANT: You must read the following before continuing. The attached presentation is in summary form and has been prepared solely for information purposes and on the basis of your acceptance of this disclaimer. The information and the opinions in this presentation have been prepared by