February has been a landmark month for Ageas UK. In the last fortnight alone, the insurer has announced the sale of the renewal rights of its commercial business to AXA UK&I, a brand new partnership with EIS and its full-year 2021 financial results. It is a pace of transformation that is showing no signs of slowing down and each new step brings the insurer closer to the strategy it defined for itself this time last year.
Understanding the context behind this strategic overhaul is critical as Ageas is very proud of the business it has built over the years, noted Ageas UK CEO Ant Middle (pictured). It was in taking the time to stand back and reflect on where the firm wants to go next that this strategy came to pass, reinforced by the understanding that the insurer needs to compete in the top quartile of wherever it chooses to deploy capital and compete in the market.
“The average performance generally in the UK general insurance market actually isn’t good enough,” he said. “Average performance is between 97% and 100% combined operating ratio (COR) if you use that as a decent metric. For us, therefore, achieving average performance won’t enable us to achieve our ambitions for the long term. What we wanted to do was make sure that we were making specific choices to invest, spend our time and compete where we believe we can achieve market-leading positions, and where we can grow in the long term on a sustainable basis.”
With that as its underlying ambition, there was a clear winner in the battle for Ageas UK’s focus – its intermediated personal lines business. About two-thirds of its overall business falls into that category, which is where the insurer has its strongest historic capabilities and where it has been concentrating its investment over the last year. It has been the most profitable part of the business over time, Middle said, and it is where Ageas believes it has the greatest platform to grow from a position of strength.
“For the remainder of our business, we chose to turn every stone to maximise the value of that business,” he said. “One of the choices we’ve made has been to sell the commercial business… Another important dimension of our strategy is the capabilities we are looking to build and invest in heavily. We are investing in our technical capability, those core fundamentals of what we need to be great at to win in the personal lines market – being brilliant at underwriting, pricing, claims, data and analytics. We’ve got to be outstanding to win so that’s where we’re investing a lot of time and money.”
Technology is crucial to this and Ageas UK has significantly advanced its digital capabilities and core technology infrastructure in recent years, most recently through its collaboration with EIS which will provide the insurer with a new core technology platform. These are its key areas of investment and focus, Middle said, alongside being a proudly low-cost business – and all of these are pulled together under Ageas’s core belief that it needs to continue to invest in its people and customers to deliver the right commercial outcomes.
“And that,” he said, “is really about targeting a sustainable, growing business that is operating at a 95% combined operating ratio or below by 2024.”
The momentum of this ongoing strategy has been great to date, Middle said, and he has been delighted by the response from the market. Ageas’s broker partners have been incredibly supportive of the insurer doubling down on its intermediated personal lines business, which is reflected in the strong 2021 results it posted yesterday.
In addition to adding 100,000 more customers, Ageas has also expanded its distribution even further, he said, welcoming new panel partnerships with Sainsbury’s Bank, Co-Op Insurance, Marmalade, and GoShorty. The work it is doing to cement its position as a market leader in the personal lines space will continue into 2022 – a year that comes with its own challenges. Market inflation, in particular, is very much on the minds of the teams across its core lines of home and motor, and the insurer will need to be incredibly disciplined from an underwriting perspective.
“But our pipeline is really strong,” Middle said. “We have been continuing to develop the opportunity to grow with our broker partners in particular and I very much expect the momentum to continue in terms of new deal development, new distribution development through 2022 to help fuel our growth for the future.
“[…] Doubling down on intermediated personal lines means our destinies are even more intertwined with brokers… [Our broker relationships] have always been important to Ageas and we’ll continue to build on that strength for the future. It’s a really important aspect of our UK business but it’s also just a fundamental part of the way the Ageas group operates internationally. Partnership is a key strategic choice that the group has had as part of its strategy for many years.”
It’s an exciting time for Ageas UK, Middle said, and he paid tribute to the role its people have played in the success of the last year. He highlighted their energy, passion and belief in the insurer’s strategic transformation journey, as well as their impressive adaption to the challenges and changes brought about by COVID-19.
“To embrace the new strategy that we have for the business and to be able to demonstrate the progress that we have made in such a short space of time, that only happens when you’ve got highly skilled people who are hugely engaged and believe in what it is that we’re trying to do,” he said. “And our job now is to continue that fantastic momentum we have by making sure that we keep and add the right, great people to our business as it continues to develop.”
