Scalable - esure/media/Files/E/Esure-V2/2017/1h-201… · First insurer to adopt SIRA; over 15...

Quo

te

esure at a glance Underwriting expertise Claims excellence

Overview

How we make money

Why esure?

Focused underwriting and risk selection

QuoteEngine

100+ rating tables

Underwritingacceptance criteria

Point of quote “NoClaims Discount”

checking

Quote barring

Fronting scorecard

Acc

ept

PrePurchase

Devicepro�ling

Quotemanipulation

SIRA

CUE

Call validate

My licence

PostPurchase

In-f

orce

pol

icy

Ren

ewal

Direction of travel to moving controls to point of quote

All underpinned by detailed monitoring

Customerfirst

Colleagueexpertise

Effectivemanagement

UK based claims centres put customers at the heart of what we do

Panel of customer focused suppliers across Motor and Home

Market leading approaches to weather related claims

Over 600 claims specialists

Continuous investment in training and development

All handlers trained in fraud detection

100 approved repairers with PAS10125 accreditation; predominantly utilising annually capped rates

Triaged approach to minimise leakage; constantly evolving strategies; market leading indemnity control

Prudent approach to reserving recognised by reinsurance panel

1

Pioneers in new technologies and precedent setting legal and investigation approachesFirst insurer to adopt SIRA; over 15 years’ expertise in automated fraud detection“Trailblazing” and award winning use of device profiling

35 dedicated colleagues in Financial Crime Unit; hub and spur approach across Claims, Operations and UnderwritingOver £20m claims indemnity savings per annumBetter than 6:1 net return on investment

Single core customer system facilitates centralised data and fraud detectionMarket leading real time device recognition throughout customer lifecycleClaim validation processes leverage techniques such as voice stress analysis

Excellent reputation across the industry, with peers and business partnersActive member of key industry counter fraud bodiesRepeated development of new capabilities with business partners

Appetite forinnovation

Collaborative and

joined up

Leverage technology

Work effectively

c30%

c30%

c40%

-

Accidentaldamage

Thirdparty

damage

Personalinjury

Home

Own accredited network of 100repairers including solus arrangements

Effective capacity, cost control and customer journey management

Bi-lateral agreements

Direct claimant strategies

Know your opponent analytics

90% of repairs through own network

Qualified technical handlers (BDMA)

Market leading approach to wet peril and fire stabilisation management

Market leading recoveries using legal partners

Know your opponent analytics

Experienced & dedicated large loss team highly regarded

Direct claimant

Improving capture rates

Limited impact from a change to Ogden discount rate

Best in class PI costs

Best in class escape of water

Cla

im

% of motorclaims

ApproachType of claim PerformanceAverage cost (£)

compared to benchmark

Customer centric approach

Customer acquisition and retention Effective Handling

Growth opportunities in motor Fraud: market leading reputation

EXPENSESA lean structure and scalable IT platforms underpin an efficient expense base

Profits used by Group to:• Pay dividends to ourshareholders• Reinvest in our businesses• Maintain our capitalreserves, and create abu�er against unexpectedmarket movements

PROFIT

WAY INCustomers predominantly come to us through price comparison websites, 80% of our new business CLAIMS Effective

claims management processes deliver a good customer experience at their time of need while minimising claims costs

SERVICESCustomer centric contribution analysis helps to provide the right products and services to customers at the right time

PREMIUMSFocused and disciplined risk selection allows us to provide competitive prices to customers

Customer

Profits used by Group to: Pay dividends to shareholders Reinvest in the business Maintain strong capital position

2 3

Expand quote footprint1 Test & learn approach2 Grow market share3

c.12.0m

c.4.5m

c.6.0m

1.47m

0.25m

0.02m

Core

Footprint 1

Footprint 2

esuresegmentation

Vehicles insegmentation

esurein-force policies

44Net promoter score

(1H 2017)

£655m £393m

2.258mIn-force policies

(1H 2017)

£107mAdditional services revenues (FY 2016)

Size Service Performance

FINANCIAL POSITIONA prudent approach to claims reserving; a strong reinsurance programme; and an investment portfolio focused on liquidity and capital preservation, all help minimise the impact of adverse events on the Group’s financial performance

>15%Return on capital

1,557Colleagues

Mark

et

size

: 3

0m

veh

icle

s

Price optimisation

Life time value analysis

Retention

Prerenewal

7%

5%

2%

16%

153%Capital coverage

(1H 2017)

£257mDividends

ScalableFocused Controlled

Income - Expenses (inc PCW fee)

= ContributionIncome - Expenses (no PCW fee)

= Contribution

New Business RenewalsCustomer life cycle

Gross written premiums

FY 2016 1H 2017

20% 23%

Digital distribution; data-led

Underwriting expertise; risk mix, price elasticity, contribution focus

Claims excellence; customer first, inflation mitigation strategies

Operational leverage; market leading expense advantage

Growth opportunities; footprint expansion

Strong financial position; robust capital coverage

Ambition; 3m in-force policies by 2020

1

2

3

4

5

6

7

> 30 Data Experts

Risk Mix

Price elasticity

Machine codelearning

Pricing and analytics

ContributionFocus

Regular and detailed monitoring

Data-Led Decisions

Lifetime Value

m

onitoring

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30 Data Risk mix & price Pricing and Contribution

Re

gu

lar &

det

aile

d

Life

tim

e

experts elasticity

analytics focus

m

onito

ring

v

alue

Instalmentincome Acquisition

costs

Investmentincome

Renewal

Additionalinsurance products

Claimfrequency

Fault

Claimseverity

Risk mix

Operationalexpenses

Bad debt

Cancellation

Fraud Not at fault

Multicar

Premium

Contribution centric Operational leverage Strong financial position

Distribution

Additional services revenues

Contribution analysis... an evolution

Expense per policy efficiency Investments

Agile, flexible and scalable technology Robust capital

Customer service philosophy Dividends

4 5 6

5%

Targetallocations

Target grossreturns

Example assets

65%

30%

0.1%

1.0%

3.0%

Cash & Liquidity

Claims backed

Surplus

OperationalCash

Money marketfunds

Investment gradefixed incomeAvg. rating ‘A

Fixed incomeHigh yield

Equity

Deliver returns while minimising surplus volatility

Appropriate alignment of asset and liability duration

Maintain liquidity and capital preservation

Capital flexibility to fund further growth

153% coverage ratio (1H 2017)

Robust capital position; sensitivities demonstrate resilience

123

123

Build & enhance rather thanrip and replace

Single core system; single data warehouse

Code ownership &enhancements in-house

Agility & speed ofdevelopment

Application programminginterface (“API”) providesflexibility to connect toexternal services

APIs allow us to adapt to future technology changes

Scalable & adaptable platform allows for integration of

external services around the core policy admin system

85%

85%

70%

65.8

70.1

47.8

70%

70%

56.4

17.1

2013

2014

2015

2016

1H 20177

Payout £m

10 years experience in price comparison website distribution

PCWs Direct Phone

100%

75%

50%

25%

0

Coverage of SCR

Normal Operating Range

Margin for contingencies

Solvency Capital requirement100%

100-130%

130-150%Motor loss ratio +5ppts

Yield curve down 50bps

Equities down 25%

Credit spreads widen 50bps

1987 Hurricane

(9)ppts

(1)ppts

(2)ppts

(2)ppts

(3)ppts

Sensitivities 1H 2017

Sensitivities are stated after earnings, tax and dividend impact

Products

Services

ASR per IFP

Instalment incomeAdmin & Cancellation

Claims income

Instalment incomeAdmin & Cancellation

£64 £19

£74cost per policy

API

Core

Externalservices

ExternalservicesExternal

services

Externalservices

API

API

API

API

Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16

Service

Retention

Customer

Value

Efficiency44Net promoter score

76%

Diversification of products and services

ScalableFocused Controlled

Market leading expense ratio

Market leading cost per policy

Efficient philosophy set from the top123

Acquistion costs flex with growth through fixed cost PCW distribution4

Source: Deloitte Motor and Home Insurance Webinar 2017

31% 23%

Market esure

Motor expense ratio

Life time customer value Committed to returning excess capital

Returned just under £260m since IPO