Co-operative returns to profit
The Co-operative Group Ltd has reported profits of £216m in its Annual Report 2014, highlighting a dramatic turnaround from its previous year’s loss of £2,301m.
The group has implemented plans for a three-year rebuild to return all businesses within its portfolio to sustainable growth, which includes a new member-led strategy for its general insurance business. The group is also continuing to implement far-reaching governance reform with the appointments of Allan Leighton as chair and Sir Christopher Kelly as senior independent director to the board.
The group’s general insurance division showed revenue of £371m (down from £476m) with an underlying operating loss of £7m (down from £36m profit).
The Annual Report 2014 stated:
2014 illustrated the difficult conditions facing the general insurance sector as a whole. Premiums reduced across both home and motor, with aggressive discounting and value promotions. Additionally, low interest rates depressed investment yields, further suppressing profitability.
Co-operative Insurance’s revenues fell after it exited business areas with low levels of profitability. Net earned premiums reduced to £371m (2013: £476m). Although premiums declined and claims ratios improved due to management action, costs were broadly unchanged, driving the business to an underlying operating loss of £7m (2013: £36m profit).
The result underlines the importance of the new strategy for the business and the delivery of technology enabled cost reduction.
Co-operative Insurance’s ethical investment policy continued to screen the fixed-income portfolios underpinning insurance policies to avoid companies that do not match up to our standards in the areas of human rights, environment, trade and animal welfare. We believe that ethical options should be available to everyone.
Our innovative ‘ecoinsurance’ motor policy reduces a car’s environmental impacts by offsetting 20% of an average car’s carbon dioxide emissions for every policy held. The offsets work by supporting carbon reduction projects in developing countries.
Market conditions will remain challenging over the next 12 to 18 months, even if motor premiums continue their modest up-turn. We will continue to execute our strategy to transform Co-operative Insurance, leveraging its three competitive advantages and a new technology platform from 2016.