Ageas UK on a high as profit rises four-fold

BARRY Smith, chief executive of insurer Ageas UK, celebrated a turnaround in the business yesterday after its profit rose more than four times to £35.4m in the first half.

Shares in Ageas SA, which provides Tesco’s insurance, leapt almost 20 per cent yesterday after the UK branch said it had made record first-half income of £882m, a rise of 84.5 per cent compared with the first half of 2010, and the Belgian parent company announced a share buyback.

Almost all the surge in profit was gained in the second quarter, as Ageas booked just £3.8m profit in the three months to April.

Smith said the upswing was driven by higher quality earnings and stronger pricing, but also a “step change” in business volumes since it bought Kwik Fit Financial Services and over-50s brand Castle Cover.

“It is a combination of quality, and that we now are a bigger business,” he told City A.M. “What we can see is significant improvement in all four parts of our business. That helps build some evidence on what we are starting to deliver.”

Ageas’ motor insurance combined ratio, a measure of its profitability, moved back into the black at 96.9 per cent compared with 109 per cent in the first half of 2010. Smith said the market was still highly competitive.