Esure lifts guidance after record third quarter

Esure has lifted its guidance for the full year following a record third quarter thanks to a strong performance in the motor division.

In a trading update for the nine months to 30 September, the insurer said gross written premiums rose 25.4% to £625.8m, helped along by a 30% rise in premiums in the motor business to £561.5m. However, premiums in the home division were down 6% at £64.3m.

Esure said in-force policies rose 10.4% to 2.3m.

Chief executive officer Stuart Vann said the motor business continues to see the benefits of the company’s proven underwriting expertise and footprint expansion programme, which enable it to offer more and more customers access to its “excellent” products and services.

In the home division, meanwhile, Vann said “current market conditions do not provide opportunities for profitable growth”.

"Our strong performance to date gives us confidence that we will exceed previous guidance. We now expect growth in premiums of 20-25% for the full year and our combined operating ratio to be at the lower end of our 96-98% range, subject to normal weather.

"We approach 2018 with confidence and remain well placed to deliver our 3 million in-force policy ambition by 2020."

Nicholas Hyett, equity analyst at Hargreaves Lansdown, said: “Growth in motor gross written premiums is no great surprise, since prices are rising across the industry. However, rapidly increasing in-force policies is more unexpected, and very welcome. The struggling home division may take some of the shine off results, but there are industry-wide headwinds in that sector, and these remain undeniably good results.

"We are particularly encouraged to see Esure making progress in its underwriting performance. Historically the group has relied more on cross-selling ancillary services than making money from its insurance operations. That looks like it’s changing. With policy numbers and combined operating ratios heading in the right direction, Esure looks like its revving up the engine for a strong end to the year.”

At 0815 GMT, the shares were up 3.8% to 266.80p.