Aviva 2005 Annual Report Download - page 36

34
Aviva plc 2005 Business review
Business review continued
Business segment performance: General insurance,
health and related services continued
Ireland
Hibernian is the largest general insurer in Ireland, with a market
share of 21%. Around 65% of our business is via brokers, with
the remainder being split between direct and corporate partners.
However, we expect further growth in the proportion of business
written through our direct channel, while brokers continue
to dominate the commercial market. Our expertise in the
management of underwriting and claims has allowed us to
maintain our leading position. Hibernian has earned strong
brand recognition in the Irish market.
We continue to focus on growing our personal and small
commercial lines business. Efficient claims handling and continuous
cost management remain core elements of our strategy.
During 2005, our disciplined underwriting strategy enabled us to
manage reducing premium rates effectively. We implemented the
strategic decision to stop underwriting motorcycle business due to
concerns over the longer term profitability of this business and in
July, our corporate partnership with Tesco moved from completion
of the pilot to a full rollout. We have also expanded our RAC
Rescue capability in Ireland and are targeting the addition of
400,000 roadside customers by 2008. We continue to invest
in Geocoding, our flood mapping project that will improve risk
selection and pricing.
The Irish general insurance market remains highly competitive,
leading to a reduction in our net written premiums to £499 million
(2004: £545 million). However, personal motor rates stabilised
in the second half of the year. Our operating profit increased to
£171 million (2004: £135 million) while the COR improved to 78%
(2004: 87%). Our underwriting result increased to £116 million
(2004: £82 million) reflecting our focus on disciplined underwriting,
lower average claim costs and frequency. Weather-related claims
were below long-term averages and benefited operating profit by
£7 million (2004: neutral impact).
We expect to see a decline in market profitability until late in 2007
for personal business and until at least 2008 for small commercial
business but we still anticipate good returns from the Irish market.
Uncertainty regarding the Personal Injuries Assessment Board’s
impact on the cost of settling claims continues. In addition, pressure
continues from media and lobby groups to curb the current level
of general insurance profits. However, the RAC acquisition gives
us the opportunity to grow our revenues in this currently under
developed market.
98%
Worldwide COR target
+22%
Increase in worldwide operating profit
>2million
claims settled in the UK alone
UK net written premium
1 Intermediaries (personal)
2 Intermediaries (commercial)
3 Corporate partners
4 Direct
1
2
3
4
16%
37%
29%
19%