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		</div><p><a href="http://londonglossy.com/wp-content/uploads/2011/02/rbs-insurance-posts-295m-loss.jpg"><img class="alignnone size-full" title="RBS, which owns several insurance brands including Churchill, has posted a 295 million pound operating loss" src="http://londonglossy.com/wp-content/uploads/2011/02/min-rbs-insurance-posts-295m-loss.jpg" alt="RBS, which owns several insurance brands including Churchill, has posted a 295 million pound operating loss"/></a></p>
<p>RBS, which owns brands including Direct Line, Churchill and Green Flag, has said its insurance operation suffered a &#8220;disappointing&#8221; year after increased reserves for bad weather and personal injury claims pushed it deep into the red.</p>
<p>The division &#8211; the UK&#8217;s biggest personal insurer &#8211; recorded a £295 million operating loss for 2010, well down on the £58 million profit it made in 2009.</p>
<p>It blamed the decline on higher reserves to cover rising personal injury costs, as well as claims from the severe winter weather seen in the UK in both the first quarter and fourth quarter of the year.</p>
<p>Despite what it described as a &#8220;disappointing profit year&#8221;, it said it had managed to reduce its losses to £9 million by the final quarter, even though it took a further £100 million hit due to the bad weather.</p>
<p>The group said it had embarked on a significant investment programme in a bid to substantially lift its operational and financial performance ahead of the expected disposal of the business in 2012.</p>
<p>The move is one of the conditions required by the European Union in exchange for the Government bailout that the bank received, although the group has not yet decided whether it will sell the division or spin it off through a stock market listing.</p>
<p>Measures taken to improve the profitability of the business include reducing the level of risk on its books, making its claims operations more efficient through the introduction of a new IT system and reducing costs, which has seen it close six of its sites. But moves to refocus the risk on its motor insurance book led to income falling by 2% during the year to £4.09 billion.</p>
<p>The group no longer offers personal motor insurance through brokers, while it has significantly scaled back the amount of business it does for fleet cars and taxis.</p>
<p>As a result, the number of policies it has in force fell by 14% during the year, although this was largely offset by a 7% rise in average motor premiums, due to significant price hikes of between 35% and 40% on like-for-like policies. The move is beginning to show signs of paying off, with a 7% decrease in income during the final quarter of the year, more than offset by a £250 million reduction in claims.</p>
<p>Overall, the combined ratio of the whole insurance business worsened to 115% from 106% during the year, meaning the group is paying out £1.15 in claims and costs for every £1 it receives in premiums.</p>
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