Specialist insurer Ecclesiastical is the latest industry player to suffer a huge decline in profits following the impact of natural catastrophes in the first half of 2016.
The company announced that its group profit before tax plunged by 57%, from £35.3 million during the first six months of 2015 to £15.2m in the same period this year.
Underwriting profit fell from £14.3m to £5.1m, reflecting the impact of the flash floods in the UK, wildfires in Canada and post-Brexit reductions in discount rates on long-tail claims reserves.
Gross written premiums (GWP) slipped from £153.9m to £151.8m as the combined operating ratio (COR) worsened from 85.8% to 94.8%.
Investment returns slightly went up from £21.6m to £22.2m despite equity losses in the following the UK’s decision to leave the European Union.
Group CEO Mark Hews said the company’s underwriting profit included “very positive results” from UK and Ireland, where profit declined from £13.8m to £9m.
The UK and Ireland business GWP also decreased from £115m to £113.5m while COR rose from 81.9% to 87.5%.
Despite the lower figures, Ecclesiastical said its profits and GWP were still “in line” with targets and expectations, with Hews describing the company’s financial performance as “strong.”
“We achieved this despite a challenging commercial environment, volatile markets and exposure to the costliest insured natural disaster in Canadian history,” Hews said.
“These results reflect the ongoing transformation in the performance of our business as we apply stronger underwriting disciplines and manage our exposure to risk tightly,” he added.
Hews claimed that Ecclesiastical is “on track to deliver another good underwriting performance in 2016.” The company has also the capital strength to weather the continuing market volatility, he said.
“Our focus is on achieving steady profitable growth, strong financial performance and improved organisational efficiency,” Hews said.
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