Access America 2003 Annual Report Download - page 20

For the year 2003
Turnover (Premium and Service Revenue)
Throughout the twelve-month period ended December 31st, 2003, Mondial Assistance
Group’s turnover from the two main business lines - travel insurance and vehicle assistance
- was strongly influenced by exceptional, adverse circumstances. First the events in Iraq and then
the SARS epidemic significantly reduced demand in tourism, while the unfavourable economic
situation in Europe had a negative impact on new car sales and the tour operator industry.
In addition, a portion of insurance premiums and service fees translated in Euros were
reduced as a result of currency exchange rates. Regarding the Group’s activity in the USA
and the UK, the effect of the USD exchange rate and the devaluation of the British Pound
led to a total loss in turnover of more than 30 million Euros, compared to a hypothetical
situation at constant exchange rates in 2002.
In the European travel insurance business, the Group experienced significant turnover
reductions in two of its largest markets, a phenomenon which was coherent with the
development of the tourism market in these countries.
The French, Austrian and Italian travel insurers attained fully satisfactory growth in
turnover increases, varying between +7% and +15%.
The assistance activities in Europe demonstrated significant growth in certain countries,
however, the overall turnover in Euros was stable compared to 2002.
In a difficult economic and political environment, revenue generated by the operations in
North America (most of which are related to travel insurance) would have increased by
11.8% had exchange rates been constant at the level of 2002. The devaluation of the USD
relative to the Euro led to a drop in turnover after translation into the Group’s reporting
currency.
Group revenues from the Asia Pacific region increased by 10%, principally because of the
service revenues and insurance premiums generated by the Australian entity, which
amounted to an increase of 60%.
The strong growth in turnover in South America was the result of a rapid expansion in the
activity of the Brazilian unit, one of the Group’s largest entities.
Claims and Expenses
The claims ratio (including claims administration costs, net of re-insurance) in the insurance
business improved to 60.3% (2002: 61.7%), while claims reserves increased by 5 million Euros
to 111.2 million Euros.
Commissions were stable: Compared to 2002, the Group’s global commission ratio on insurance
premiums (gross of re-insurance) and service revenue decreased by a marginal 0.1 point to
reach 17.0%.
General expenses (after transfer of expenses directly related to claims administration and
assistance files) decreased by -5.1% while the amount reallocated to assistance services
significantly increased. Without such transfers, the general expenses increased only slightly
(+1.8%). The operating entities succeeded in adapting their costs rapidly and efficiently to
the changing environment and maintained expenses far below budget previsions.
Review of operations
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