RBS Insurance: UK Personal General Insurance Competitor Profile 2006

Table of Contents

• CHAPTER 1 INTRODUCTION
  • What is this report about?
  • Who is the target reader?
  • How to use this report
• CHAPTER 2 RBS INSURANCE: UK PERSONAL GENERAL INSURANCE COMPETITOR PROFILE 2006
  • RBS Insurance is owned by Royal Bank of Scotland, and is involved in the UK market via a number of well-known insurance brands
    • Insurance business accounts for just over 20 per cent of RBS' s total income
    • RBSI pursues a multi-brand strategy in the UK
    • At the end of 2006, RBSI restructured its business around different product groups
  • Motor is the largest of RBSI' s personal lines, but household is both more profitable and faster growing
    • Most of RBSI' s brands are exclusively personal lines insurers, with only NIG writing both personal and commercial business
    • Private motor is the largest of RBSI' s personal lines, but household has achieved higher growth in the last five years
      • The product mix of RBSI' s subsidiaries vary, but motor is the largest line of business for all subsidiaries
      • RBSI subsidiaries saw faster growth in their household books, than in their motor books between 2001 and 2005
    • The Group achieved limited growth in private motor in 2005, but the book returned an underwriting loss, whereas the profitable household book stagnated
    • In the first half of 2006, RBSI increased premium income by 2 per cent and improved its profits by 4 per cent
      • No major changes took place in terms of RBSI' s product mix, with motor still dominant among personal lines
    • The dominance of motor is also reflected in the advertising spends of Direct Line and Churchill
  • Private motor will continue to be important to RBSI, but household and SME business is seen as having more growth potential
    • RBSI believes that it will be able to grow its household book in the next two years
    • The motor book is only expected to grow in line with the market, but RBSI is well placed to take advantage of the turn in the cycle
    • RBSI sees the strongest growth potential in international expansion and in commercial lines, targeting SMEs via brokers and its own bank brands
      • Growth is expected in SME insurance distributed via brokers and bank branches
      • RBSI also expects its international motor insurance business to be an area of growth going forward
  • RBSI follows a multi-channel distribution strategy with different brands focusing on different channels
    • Most of RBSI' s personal lines business is distributed directly by its own brands, but partnership business is also important to the Group
    • RBSI sells direct via Direct Line, Churchill, and Privilege
      • Direct Line and Churchill have high advertising budgets, in line with other direct brands for which public awareness is very important
    • UKI distributes exclusively via corporate partnerships, with Tesco alone accounting for 16 per cent of RBSI' s income
    • RBSI also distributes personal insurance via its bank branches
  • Summary: RBSI expects commercial insurance and international markets to provide the strongest growth opportunities, while growth in motor and household is expected to be more subdued
    • Limited growth is expected in motor and household
      • The Group sees its strongest growth opportunities in commercial insurance and international markets
• CHAPTER 3 APPENDIX
  • Supplementary data
  • Methodology
    • Competitor data
      • GWP versus GEP reporting
      • Major changes in FSA Return categories and their impact
    • Market size
      • Changes in market size information
  • 2005 definitions for lines of business
    • Accident & health
    • Motor
      • Total private motor
      • Private motor comprehensive
      • Private motor non-comprehensive
      • Motorcycle
    • Property
      • Household and domestic all risks.
    • Financial/Pecuniary loss business
      • Total personal financial loss business
    • Total personal
    • Total commercial
  • Ratio analysis by competitor
  • Premium income measures
    • Earned premiums
    • Gross Premium
    • Net Premium
    • Written premiums
  • Current readings
  • Future readings
  • Do you need more information?
  • SPP writing team
  • List of Tables
    • Table 1: RBSI' s split between personal and commercial business, 2005
    • Table 2: RBSI' s growth rates and share of personal GWP by line of business compared to the market, 2005
    • Table 3: RBSI subsidiaries' premium income for household and private motor, 2001-5
    • Table 4: RBSI' s personal premium income by line of business, 2001-5
    • Table 5: RBSI' s personal lines premium income, market share, combined ratio and ranking by line of business, 2001-5
    • Table 6: Churchill and Direct Line' s advertising spend by line of business, 2005
    • Table 7: Churchill and Direct Line' s advertising spend by medium, 2005
    • Table 8: Total insurance advertising spend by line of business for the Royal Bank of Scotland' s banking brands , 2005
    • Table 9: Direct Line' s personal lines premium income, market share, combined ratio and ranking by line of business, 2001-5
    • Table 10: Churchill' s personal lines premium income, market share, combined ratio and ranking by line of business, 2001-5
    • Table 11: UKI' s personal lines premium income, market share, combined ratio and ranking by line of business, 2001-5
    • Table 12: NIG' s personal lines premium income, market share, combined ratio and ranking by line of business, 2001-5
  • List of Figures
    • Figure 1: RBSI follows a multi-brand strategy in the UK
    • Figure 2: Personal lines accounted for more than 90 per cent of RBSI' s insurance book in 2005
    • Figure 3: RBSI' s household book has seen the most growth between 2001 and 2005, though private motor is still its largest book of business
    • Figure 4: Private motor dominated the personal books of RBSI subsidiaries, but the importance of other personal lines varied in 2005
    • Figure 5: RBSI' s subsidiaries have seen faster growth in household than in private motor insurance between 2001 and 2005
    • Figure 6: The Churchill Group acquisition had a significant impact on RBSI' s premium income in motor and household insurance
    • Figure 7: RBSI' s product mix in the first half of 2006 shows that UK motor and home still dominate
    • Figure 8: Both Churchill and Direct Line advertise primarily motor insurance, with Direct Line spending more on niche lines in 2005
    • Figure 9: NIG has achieved fast growth in commercial lines such as motor and property between 2004 and 2005
    • Figure 10: RBSI' s own brands accounted for over half of its insurance income in H1 of 2006
    • Figure 11: Like all top direct insurers, Direct Line and Churchill advertised mainly via television in 2005
    • Figure 12: The Royal Bank of Scotland' s banking brand mainly advertised home insurance in 2005
    • Figure 13: RBSI expects various drivers to help it grow over the next two years