esure Group has published its annual report for the fiscal year 2023, with the CEO praising a “robust” year despite a dip in profitability.
In the report, the motor and home insurance provider marked a period of navigation through challenging market conditions with a focused shift towards enhancing written profitability rather than merely increasing policy volumes.
The year 2023 witnessed the company grappling with industry-wide challenges such as elevated claims inflation and a resurgence in claims frequency to levels seen prior to the pandemic.
Amid these challenges, esure Group notes that it maintained a steadfast commitment to pricing and underwriting discipline, directing capital towards transformative initiatives rather than pursuing growth of questionable quality. The number of in-force policies stood at 2.07 million, a decrease from 2.32 million in 2022.
Despite the adverse market conditions impacting earned profitability, resulting in a trading loss of £16.7 million (compared to a £49.8 million profit in 2022), the company reports that its written profitability has significantly strengthened, mirroring pre-pandemic performance levels.
This improvement is credited to the restoration of pricing to sustainable levels, a 38% increase in motor average written premium, and a turnover rise to £970 million (up from £836 million in 2022).
The company's overall profitability dipped to a loss of £60.1 million after tax, primarily due to investments in the group’s transformational activities. However, with the successful migration of its entire customer base completed in Q1 2024, esure anticipates the conclusion of elevated investments in legacy system migration and technology costs.
With the Eligible Own Funds standing at £417.8 million at the end of 2023 (up from £389.6 million in 2022), the Group’s solvency coverage ratio remains healthy at 151%, indicating financial resilience and strategic capital allocation.
2023 also marked the completion of esure's transformation program, with all customers now fully integrated into a leading digital platform. The company says that this enables esure to leverage competitive advantages such as enhanced efficiency, improved risk selection, and more sophisticated pricing strategies aided by artificial intelligence (AI).
Looking ahead to 2024 and beyond, esure Group remains optimistic about its prospects for growth and profitability.
David McMillan, chief executive officer of Esure Group, reflected on the year's achievements, highlighting that “2023 saw another year of significant investment in the business and strong progress in our transformation.”
“During the year, we focused on reaching the most significant milestone in our transformation journey: the migration of all customers, across all three of our brands, to our new state-of-the-art digital platform,” McMillan said. “We were delighted to complete this landmark achievement within the first few weeks of 2024.”
“We finished 2023 with a robust, adequately priced book of business underpinned by a prudent reserving policy and, while market conditions contributed towards weak 2023 earned profitability, the written profitability of our business is extremely strong and comparable to pre-pandemic levels,” he said.
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