RSA posts steady 2019 results following big changes for the insurer

UK insurer RSA reported steady results for 2019, with a slight increase in its profit, and virtually no change to its combined ratio and new written premiums compared with 2018.

CEO Stephen Hester said the results followed an important year for the business that included key management changes and noted that pricing in some markets were hardening.

The company made a pre-tax profit of £492 million (£551 million excluding lines of business it has exited), up 3 percent on the 2018 figure of £480 million.

The group combined ratio was 94.6 percent (93.6 percent excluding-exits) compared to 96.2 percent in 2018. Net written premiums were £6.4 million, (£6.4 million excluding-exits) down 1 percent from 2018.

Stephen Hester, RSA group chief executive, said: “We are pleased to report strong results for RSA in 2019. Our profits are up, our dividends are up and return on tangible equity is very good. This progress is driven by improved underwriting, which has produced record current year profits and combined ratio.

“2019 was an important period for RSA. Significant management renewal and a repositioning of our UK & International division are showing good promise. Our groupwide focus on underwriting improvement with strong cost control proved effective. Yet there is plenty more we can do to improve each of our businesses for customers and shareholders. There are challenges, but we are determined to drive further progress and high performance.”

Commenting on market conditions, the company said: “Insurance market conditions are competitive across our territories with significant price/volume trade-offs. However, rate hardening and capacity adjustment is helping us re-price in Canada and in previously loss-making international business lines

“Financial market conditions are volatile, driven by political developments and their knock-on to monetary and economic trends. RSA is relatively well protected with conservative investment portfolios and a broad array of internationally derived profits. However, bond yields fell c.20-50bps in 2019.

“This will reduce future investment income in addition to its ‘pull to par’ impact on capital usage. FX movements also have a translation effect on RSA, costing c.2% at underwriting profit level in 2019 compared to the prior period with similar impact likely again in 2020. The UK’s Brexit process is not expected to materially impact RSA beyond any financial market effects.”