esure reduces its 2015 interim dividend by 18%

DividendMax Ltd.

esure reduces its 2015 interim dividend by 18%

Highlights

Gross written premiums up 5.8% to £275.5m (HY 2014: £260.4m)

In-force policies up 2.5% to 1.995 million in the first half of 2015 (FY 2014: 1.946 million, HY 2014: 1.974 million)

Combined operating ratio 4.9ppts higher at 95.8% (HY 2014: 90.9%) largely driven by a reduction in favourable development of prior accident year reserves to 14.9% of net earned premiums (HY 2014: 19.0%)

Underlying profit before tax down 21.3% to £46.5m (HY 2014: £59.1m)

Underlying earnings per share down 20.4% to 9.0 pence (HY 2014: 11.3 pence)

Interim dividend per share of 4.2p (HY 2014: 5.1p), a payout ratio of 70% of underlying earnings per share for the HY 2015 (HY 2014: 70% of reported earnings per share)

Strong financial position with IGD coverage of 390%, after allowing for the interim dividend; remain on track for the implementation of Solvency II

Gocompare revenue broadly flat at £59.6m; profit before tax up 25.2% to £13.4m (HY 2014: Revenue of £59.1m; profit before tax of £10.7m); and cash earnings accretive for the Group

Peter Wood, Chairman of esure Group plc, commented:

"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. In addition, in the short space of time since completion, the management team have already launched a new marketing campaign, with the return of Gio Compario, and rolled out a number of other initiatives as we look to re-energise the business.

"The Board has declared an interim dividend of 4.2 pence per share, which represents a payout ratio of 70% of the Group's underlying earnings per share. The dividend comprises a base dividend of 3.0 pence per share and a special dividend of 1.2 pence per share."

Stuart Vann, Chief Executive Officer of esure Group plc, commented:

"Our performance in the first half of 2015 is in line with the guidance provided at the time of our 2014 preliminary results announcement.

"We have grown gross written premiums by 5.8% to £275.5m in the first half of the year and in-force policies by 2.5% to 1.995 million since the year end, through positive rating actions and underwriting initiatives. We continued to act in a disciplined manner and implemented rate increases across the portfolio higher than those reported in the various rating indices. 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.

"Our outlook for 2015 is that we expect the combined operating ratio for the full year to be in the region of 96% to 97%, assuming normal weather for the remainder of the year.

"I am excited by what we have done so far at Gocompare and believe there are significant opportunities in the medium to long term to at least double its EBITDA in a five year period."

 

Companies mentioned