Motor Insurer Results Even Worse Than Feared in 2009

Companies Urged to Review Strategy as Personal Injury Claims Mount and Reserves Dwindle

EPSOM, England, January 14 - Combined operating ratios for the private and commercial motor insurance
market in 2009 are set to exceed 115% according to EMB, the international
actuarial and business consultancy.

In private motor, combined operating ratios could exceed 120% it says,
while commercial motor ratios are likely to exceed 110%.

A sharp increase in bodily injury claims, combined with the reduced
reserves available for release, will result in significantly deteriorated
reported results for many companies for the year.

Naeem Ali, author of EMB's Annual Motor Report, said: "It has reached a
point now where companies operating in these markets have to make a conscious
decision for profitability over growth, or face eroding their capital base.
The logical conclusion from these figures is that motor premiums need to
increase by circa 20%."

While underwriting losses, including expenses, are up by at least 10% on
2008, EMB estimates, the big element affecting 2009 results will be the
dwindling amount of reserves. In 2008 reserve releases reduced bottom line
losses by nearly 10%. Now, however, the well appears to be drying up and some
companies may have to dip into capital.

Significant rises in the frequency and severity of bodily injury claims
are major contributors to the deteriorating performance. EMB estimates an
increase in excess of 10% in the cost of bodily injury claims per policy for
claims under GBP100,000 from 2008 to 2009.

As well as an increased number of claims being reported, insurers are
also seeing an increased number of claimants per claim. For larger claims,
the growing trend towards periodic payment awards has also fuelled a notable
rise in the number of claims exceeding GBP5 million.

Naeem Ali said that based on recent experience across a large number of
companies, EMB had revised its estimates for 2009 performance downwards since
publication of the last report on 2008 FSA returns in September.

"Even with recent price increases and the improving yields these are
slowly starting to deliver, the signs are that the industry will continue in
the red in 2010," he noted.

NOTES TO EDITORS

About EMB

Established in 1993, EMB (www.emb.com) is a rapidly growing
international consultancy firm specialising in non-life insurance. Covering
personal lines, commercial insurance and the London Market, its services
include Business Consultancy, Actuarial Consultancy, Investment Consultancy,
Professional Development, Marketing Sciences, Fraud Prevention and Software.
Headquartered in the UK, EMB employs more than 300 people around the globe
with clients that include 28 of the top 30 non-life companies in the world.

    For more information, please contact Graham Whitehead at EMB:
    Tel: +44(0)1372-751060
    Email: graham.whitehead@emb.com
    Web: www.emb.com

For more information, please contact Graham Whitehead at EMB: Tel: +44(0)1372-751060, Email: graham.whitehead at emb.com