by Susan Edmunds
Sovereign posted a profit for the half-year ended December 31 of $57 million, up 43% on the same period a year earlier but down 10% on the first half of 2014.
The decline compared to the earlier half was driven by higher lapse rates. Brewis-Weston said they could be seasonal. “There’s more movement between July and October but overall it’s running about sub-10% which is pretty good.”
In-force premiums were up 5% compared to the same period in 2013.
Brewis-Weston said the company was doing well. “It’s been a pretty solid 12-month period for Sovereign, I’m happy with the result.”
But he said there was more work to do. Sovereign had brought new products to the market and revamped its health business which was starting to gain traction.
“We’re looking to improve the adviser and customer value proposition going forward. I’m personally happy with the result, it’s always good to be making money rather than not but if you look at where the company could be in terms of growing the market there is more we could be doing.”
He said the company’s ROE of 17% was reasonable on Australasian standards and Sovereign was investing in revamping the brand and in its technology. “But there’s lots of room for improvement with Sovereign, we’re not complacent by any stretch."
About half of Sovereign’s business is done through advisers. Brewis-Weston said he expected that to continue. Personal insurances were more complex than cover for something such as a car, he said, and advice was important.
Brewis-Weston said there had been an increase in the number of young people buying simple, cheaper insurance cover where the value proposition was easily understood. “For their stage in life it’s a good solution. As their circumstances become more complicated, if they’re buying a house, they can upgrade their cover.”
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