Esure share price drops as profit hits the brakes

The online insurer owns brands such as Sheilas' Wheels
Shares in Esure tumbled by 9.6 per cent yesterday after it published interim results showing a 21.3 per cent fall in underlying profits before tax.

Profits in Esure’s motor insurance arm fell to £3.3m, 80.7 per cent down on the previous year’s half-year figure of £17.1m.

The online insurance firm, which owns Sheilas’ Wheels and Go Compare, said profits from its motor book had suffered particularly from an increase in the number of small personal injury claims.

Chairman Peter Wood said: “The management team continue to act in a disciplined manner in challenging market conditions, while delivering on the group’s strategic objectives.

“I am delighted that we have now acquired Gocompare and it is already cash earnings accretive for the group.”

Esure declared a dividend payout of 4.2p per share, down from 5.1 pence at the halfway point of the previous year.

Earnings per share were down to 9p from 11.3p at the same time last year.

The insurer’s chief executive Stuart Vann also referred to headwinds facing the firm.

“The claims environment for the motor market continues to deteriorate and as a consequence we will seek to implement further rate increases in the second half of the year as we look to mitigate against these trends,” he said.

Vann added that Esure’s outlook for 2015 includes targetting a combined operating ratio for the full year of between 96 per cent and 97 per cent, assuming normal weather for the remainder of the year.

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