Esure — H1 2013 Earnings Presentation
32 slides from Esure's earnings presentation, Aug 6, 2013
Slide 1: 2013 Interim Results Presentation
GROUP 2013 Interim Results Presentation 6 August 2013
Slide 2: Agenda
Agenda GROUP Welcome – Peter Wood, Chairman Highlights – Stuart Vann, Chief Executive Officer Financial results – Darren Ogden, Chief Finance Officer Business update & outlook – Stuart Vann, Chief Executive Officer Questions & answers Slide 1
Slide 3: Welcome
GROUP Welcome Peter Wood, Chairman Slide 2
Slide 4: Successful IPO, positive start as a plc
GROUP • Successful IPO • Positive start to life as a plc • Strong Management Team - Nimble - Focused - Adaptable Slide 3
Slide 5: Highlights
GROUP Highlights Stuart Vann, Chief Executive Officer Slide 4
Slide 6: Highlights
Highlights GROUP • Gross written premiums up 6.7% to £265.4m (1H 2012: £248.8m) Financial • Trading profit up 7.2% to £65.2m (1H 2012: £60.8m) • Combined operating ratio improved by 4.8ppts to 89.6% • LASPO Strategic • ECJ • Diversified income • New claims management system Development • esure Broke
Slide 7: Financial Results
GROUP Financial Results Darren Ogden, Chief Finance Officer Slide 6
Slide 8: Financial highlights
Financial highlights GROUP • Gross written premiums up 6.7% to £265.4 million • Trading profit up 7.2% to £65.2 million • Combined operating ratio improved by 4.8ppts to 89.6% • Pro forma earnings per share up 16.9% to 10.6 pence • Interim dividend of 2.5 pence per share Slide 7
Slide 9: Group financials
Group financials GROUP Key messages 1H 2013 1H 2012 Movement FY 2012 Gross written prem iums (£m ) 265.4 248.8 6.7% 515.0 • Growth in top line and profit Trading profit (£m ) 65.2 60.8 1 7.2% 138.1 2 • Sub 90% combined operating ratio • Diversified income streams Profit after tax (£m ) 44.3 37.9 16.
Slide 10: Motor
Motor GROUP Key messages 1H 2013 1H 2012 Movement FY 2012 • Top line growth of 6.8% underpinned by strategic Gross written prem iums (£m ) 221.9 207.7 6.8% 429.0 actions Trading profit (£m ) 18.3 16.4 1 11.6% 30.5 2 • Solid loss ratio performance against the backdrop of softening rate environment an
Slide 11: Home
Home GROUP Key messages 1H 2013 1H 2012 Movement FY 2012 • Growth driven by targeted pricing rather than through aggregator distribution Gross written prem iums (£m ) 43.5 41.1 5.8% 86.0 • Top line growth aided by tactical price reductions in additional services revenues Trading profit / (loss) (£m
Slide 12: Additional Services Revenue
Additional Services Revenue GROUP Key messages Additional Services Revenue £49.6m £51.0m • Total ASR (excluding claims income) up 8.9% on 1H 2012, with total income from additional services impacted by ban on claims referral fees £41.7m £45.4m • Motor ASR per IFP (excluding claims income) up 2.2% ex
Slide 13: Investments
Investments GROUP Key messages Portfolio 1.3% • Strategic asset allocation remains broadly unchanged, FRN's underpinned by philosophy of minimising volatility and 23.4% 24% capital preservation Corporat e bonds • Short duration of 1.00 with 87% of investments in ‘A’ 33% 75.3% rated and above Governm
Slide 14: Loss ratio and reserves
Loss ratio and reserves GROUP Reserves remain in excess of 15% above the actuarial best estimate Motor Home 70.0% 1.0% 64.5% 3.9% 0.6 % 1.0% 1.0% 3.5% (0.2)% 67.6% 56.1% FY 12 Loss Weather Drive Assist PY C urrent year 1H 13 Loss FY 12 Loss ratio Weather PY C urrent year 1H 13 Loss ratio ratio movem
Slide 15: Regulatory capital
Regulatory capital GROUP Key messages FY 2012 As at the 30 June 2013 (£m) 1H 2013 FY 2012 (Adjusted) • The Group is now debt free following repayment of subordinated debt at IPO Statutory solvency capital • IGD coverage ratio has increased to 306% Total tier 1 capital 295.4 253.0 287.9 • Risk based
Slide 16: Interim dividend
Interim dividend GROUP Key messages Dividend Calculation 1H 2013 • 2013 interim dividend of 2.5 pence per share Interim profit after tax (£m) (a) 44.3 - 1.8 pence per share “base interim dividend” (50% of PAT) Payout Ratio – Base (b) 50% Payout Ratio – Special (c) 20% - 0.7 pence per share “special
Slide 17: Business update & outlook
GROUP Business update & outlook Stuart Vann, Chief Executive Officer Slide 16
Slide 18: Motor: growth
Motor: growth GROUP Historic Growth Strategy Motor Gross Written Premium • We are a dynamic business and will continue to respond quickly to changes in the market Q1 Q2 Q3 Q4 • Growth will not be in a straight line – there will always be periods of acceleration and deceleration • Our focus is always
Slide 19: Gender Directive benefit for Sheilas' Wheels
Gender Directive benefit for Sheilas’ Wheels GROUP Slide 18
Slide 20: Sheilas' Wheels opportunity
Sheilas’ Wheels opportunity GROUP Sheilas’ Wheels Mix Balance Retention Margin 93.1% 1 Female Male 2 • Female weighted book • Strategic play • Competitive pricing… …good for the customer and good for us 3 Slide 19
Slide 21: Civil justice reforms: key changes to date
Civil justice reforms: key changes to date GROUP • Ban on personal injury referral fees • Reduction in legal fixed costs Slide 20
Slide 22: Civil justice reforms: early days
Civil justice reforms: early days… GROUP Key messages Market frequency data No. of claims notification forms created and sent to a compensator using MoJ claims portal 1 It’s still early days… 100,000 90,000 • …industry data on claims numbers 80,000 70,000 • …IFP growth exposure 60,000 50,000 40,000
Slide 23: Civil justice reforms: the future
Civil justice reforms: the future GROUP Recent Growth Possible value Shareholder opportunities Developments Developments? Stage 1 fee MoJ Claims Small Claims Additional Ban on paymentReduction portal limit Limit Whiplash postponed Referral extended from increased in Fixed Reforms? Fees to Stage 2 Co
Slide 24: Home developments
Home developments GROUP Diversification of underwriting profit Performance 27% Motor underwriting Home underwriting Source: esure Group Pricing Distribution Aggregator distribution growth rates c20% 0.4% 2010 - 2012 1H 2013 Source: MoneySupermarket Monitor Home Insurance Source: esure Group, Managem
Slide 25: Additional Services Revenue
Additional Services Revenue GROUP Simple Volume / promotion margin Customer Wider benefit Simple coverage product Highly competitive pricing Slide 24
Slide 26: Research and development
Research and development GROUP Slide 25
Slide 27: Summary
Summary GROUP Financial Outlook… • Happy with progress as a new PLC • Gross written premiums up 6.7% to £265.4m • Tough market conditions implies lower premium growth for the full year • Trading profit up 7.2% to £65.2m • We have many positive factors: • Combined operating ratio improved by 4.8ppts
Slide 28: Thank you
GROUP Thank you Slide 27
Slide 29: Questions and answers
GROUP Questions and answers Slide 28
Slide 30: Appendix I
GROUP Appendix I References Slide 29
Slide 31: References
References GROUP Slide 5 1. Trading profit is defined as earnings before interest, non -trading costs, amortisation of acquired intangible assets and tax. Tr ading profit is a non-IFRS measure which management uses to evaluate group performance. It may not be comparable with similarly titled measure
Slide 32: Disclaimer
Disclaimer GROUP The information contained in this presentation has not been independently verified and this presentation contains various forward-looking statements that reflect management’s current views with respect to future events and financial and operational performance. The words “growing”,