Leading legal expenses insurer DAS dipped into the red last year, while its after-the-event insurance business shrank.
The Bristol-based company reported that a loss after tax of £5.7m for 2015, compared to a restated profit of £0.5m in 2014.
Gross written premium for 2015 was £111m– down from £143m – which it attributed primarily to a reduction in ATE business.
The company said ATE premiums were “impacted by a reappraisal of the basis of estimating revenue for clinical negligence products, premium adjustments from a review of old policies and other adjustments” – resulting in a total one-off reduction of £16m.
DAS’s loss ratio hit 76.4%, meaning that it paid out £76.40 in claims for every £100 received in premiums, while the combined operating ratio – calculated by taking the sum of incurred losses and expenses and dividing them by earned premium – also worsened significantly from 103.5% to 119.6%.
More positively DAS reported launching a new home legal expenses offering, while it maintained a “solid capital position”, benefitting from a capital injection of £5.3m from its parent company ERGO during the year.
During 2015, the company also won the gold retail award at the 2015 Nudge Awards for the use of behavioural science in creating communications to increase customer understanding of legal expenses insurance by designing and testing customer welcome letters to maximise comprehension. The Nudge Awards aim to set a gold standard for work in the behavioural science community.
DAS chief executive Andrew Burke described 2015 as “a year of transition”. He explained: “The company undertook a rigorous review of its operations, invested significantly in new platforms and began a refresh of its senior leadership team.
“This is part of our long term strategy to ensure that we have the capability and structure to embrace innovation and continue to enhance our position as a valuable strategic partner.
“While the underlying business remains strong, 2016 has seen further investment in customer propositions, improved systems, controls and expertise which will impact the company’s financial performance in the short-term. Looking further ahead, the strength of our capital position, structure and people means that I am extremely positive about the future of the business.”
The update also confirmed that legal action against former CEO Paul Asplin is continuing. It has been reported in the insurance press that DAS is bringing a private prosecution against Mr Asplin and several others for conspiracy to commit fraud against the company, following an audit of the ATE division.
According to Insurance Age, it was believed that he was originally suspended in 2014 over concerns about his relationship with a former service supplier to the insurer, before leaving the company last year. Mr Asplin has protested his innocence.
A hearing to decide whether the case will progress is expected in December.
- Insurance premium tax rose from 9.5% to 10% on 1 October.