Wilhelm von La Chevallerie, managing director of CIB.
Short-term insurance underwriting manager CIB is on track to exceed R600 million in gross written premium during 2015, following an impressive performance in 2014. CIB and its broader group of companies reported more than R20 million in EBIT for the 12 months to 31 December 2014.
“We have built our business around a ‘best in class’ service offering to each of the 800 brokers in our extensive broker network – a dedication and focus that ultimately reflects in the bottom line,” says Wilhelm von La Chevallerie, managing director of CIB. He adds that the group’s exceptional service offering is complemented by quality underwriting and improved claims-handling efficiencies.
Although an improved bottom line is a good indicator that a firm is getting things right there are a number of other measures that insurance analysts focus on. One of their preferred measures of insurer or insurance underwriter ‘health’ is the loss ratio (simply defined as the ratio of incurred claims to earned premium).
The loss ratio is not only an indicator of underwriting performance but also reflects and translates into profitability. CIB’s loss ratio remains among the best in the industry at an impressive 59% for the 2014 financial year.
CIB attributes its strong 2014 performance to three main factors, these being: the careful selection of risks, the support of its like-minded business partners (brokers) and benign weather conditions. Its focused strategy has in turn resulted in an improved mix of business. “Our focus on commercial lines and high net worth personal lines clients is certainly paying dividends,” says Wilhelm.
CIB has also improved its operational efficiencies over the reporting period thanks to improved scale. It is now a first tier insurer for three national corporate broking houses and has relationships with more than 800 supporting brokers.
Can CIB carry its momentum into the next reporting period? “Growth is never easy in a competitive market, but we can build on a solid reputation and consistent results,” notes Wilhelm. “This will provide the necessary impetus for CIB’s growth in 2015.”
The sector’s results were severely rocked by Gauteng hail-storms in 2012 and 2013. Most market players posted improved results in 2014, but whether the cycle has ‘turned’ remains to be seen.
“CIB will continue to partner with like-minded intermediaries that seek to provide superior service to our mutual clients,” says Wilhelm. These partnerships allow the firm to align the risk-management thinking throughout the value-chain while the alignment, in turn, contributes to the underwriting results. CIB is working hard to maintain the positive momentum in recent reporting periods into the future.
At the same time the country’s larger traditional insurers are focusing on corporate and commercial lines while their fledgling ‘direct’ insurance businesses are finally turning the corner to profitability.
Santam powered through 2014 with a 10% improvement in gross written premium (to R22 billion) and higher profits on the back of a 15% growth in its commercial lines business. The group’s direct business, MiWay, wrote R1.5 billion in gross written premium and generated a profit for the first time.
Mutual & Federal meanwhile improved its claims ratio from 76% in 2013 to 69% last year as a result of increasing rates during the year and implementing a strategy to reduce claims costs by driving efficiencies. Underwriting margins at the insurer turned around from a 4% loss in 2013 to 2% in 2014. The insurer’s direct business iWyze narrowed its 2013 loss from R136 million to R85 million in the latest reporting period.
Zurich has struggled over the past year with a R400 million slide in gross written premium to R3.7 billion. Despite this the group’s initiatives to improve performance are bearing fruit and almost all of its key ratios have improved: The claims ratio is up from 79% in 2013 to 74% in 2014 and the underwriting margin has strengthened.
“CIB will build on our 2014 successes over the next year by sticking with our ‘quality over quantity’ principle, strengthening our relationships with brokers and the end-consumers and leveraging the decades of experience in our management team,” concludes Wilhelm.
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