Motor insurance drives rise in premiums at UK's esure

British insurer esure Group Plc <ESUR.L> said on Wednesday it expected 20-25 percent growth in full-year premiums as it reported a record quarter for premiums, helped by rising demand and legal changes that raised the cost of motor insurance.

The company, which provides insurance products to drivers, home owners, pet owners and holiday makers across Britain, said gross written premiums rose 25.4 percent to 625.8 million pounds in the nine months ended Sept. 30. This was higher than the 600.3 million pounds estimated by RBC.

The insurer also said it expected its full-year combined operating ratio to be at the lower end of its 96-98 percent range, which translates into a higher underwriting profit. A number below 100 percent indicates a profit.

Motor gross written premiums jumped 30.4 percent to 561.5 million pounds in the nine months period.

The average price of motor insurance in Britain jumped 10 percent in the third quarter, taking premiums to their highest level since 2012, the Association of British Insurers (ABI) said on Friday.

A government decision this year to cut the personal injury discount rate contributed to a rise in the size of payouts, denting insurers' profits and lifting premiums to record highs.

But Britain announced plans last month to change the rate for calculating personal injury payments, a move expected to reduce the size of the payments.

The insurer esure competes with firms such as Aviva <AV.L>, RSA <RSA.L>, Direct Line <DLGD.L>, Hastings <HSTG.L> and Admiral <ADML.L> in the highly competitive car insurance market.

Direct Line and Hastings both reported higher nine-months gross written premiums.

Live customer policies grew by 10.4 percent to 2.324 million, slightly ahead of RBC's expectations of 2.302 million.

The company reiterated its target of 3 million live customer policies by 2020.

"We expect the statement to be received well by the market due to the higher growth guidance and reiteration of the 2020 ambition which we believe has been a key cause of recent weakness in the stock," RBC analysts, which rate esure as "underperform" said.

In its statement, esure said it remained "disciplined" in home insurance, where gross written premiums fell 6 percent, as current market conditions did not provide opportunities for profitable growth.

Trends in home insurance have remained weak, hurt by soft premiums because of intense competition, with heightened claims inflation a key challenge.

(Reporting by Noor Zainab Hussain in Bengaluru; Editing by Louise Heavens and Edmund Blair)