The shares slide 2.2% to 249.4p as the FTSE 250 insurer expects a combined ratio – premiums minus claims and costs – of around 96% or 97% for 2015, if weather conditions remain normal in the remainder of the year.
This puts the ratio close to the 100% loss-making point, so a spike in claims linked to storm damage could make it a bad year for the insurer. On the upside, a hike in claims could lead to premium rises in 2016.
The impending arrival of the Met Office-named Storm Abigail could lead to a rise in claims from Esure’s 560,000 home policies, which generated £66.4 million in premiums in the nine months to 30 September, the same level as in the same period a year earlier.
There was some good news. The group’s gross written premiums improved 5% to £430.5 million in the nine months to 30 September, compared to the same period of 2014.
This was the result of Esure’s strategy of increasing its motor premiums due to rising claims. Motor premiums improved 5.9% in the year to date, or by £130.8 million, to £364.1 million. This came despite a 2% rise in the number of motor policies to 1.4 million.