Esure Declines as CEO Sees Pricing Pressure for 12 MonthsSarah Jones
Esure Group Plc’s shares fell as Chief Executive Officer Stuart Vann said he doesn’t expect prices to increase in the U.K.’s motor insurance market for at least another 12 months.
Esure, which began trading in London a year ago, posted a 2.5 percent rise in full-year pretax profit to 118.4 million pounds ($197 million) from 2012, in a statement today. The Reigate, England-based insurer also forecast Britain’s severe weather this year will cost as much as 4 million pounds more than expected.
“We have not seen an easing off in pricing” in the first quarter, Vann said in a telephone interview. “Good strong operating top-line growth is going to need a shift in the market.”
Car insurers including Esure and Admiral Group Plc have been hurt by competition, which has pushed insurance rates lower after peaking in 2012. Admiral said last week that its medium-term profitability will be “greatly influenced” by an eventual turn in U.K. prices.
Esure declined 3.9 percent to 264.6 pence in London after the Financial Conduct Authority today also released a report that promises to “shake up” the 1 billion-pound general insurance add-on market to increase competition. Add-ons are insurance products sold with primary products such as a credit card or bank account.
Esure reported additional services revenue, including add-on products, of 103.9 million pounds in 2013, little-changed from a year earlier.
“We don’t have a problem with what the FCA have presented,” said Vann. “We support what they are doing. Today’s review is not a great shock, a lot of it is already covered by the Competition Commission.”
Esure paid a final dividend of 13.3 pence, bringing the full-year payout to 15.8 pence a share.