RSA reaps the rewards of restructuring in 2015 results

General insurer RSA has posted a remarkable 221 percent increase in its post-tax profits, thanks to good underwriting results in what has represented a remarkable turnaround for the company that has faced significant challenges in recent years.

The insurer posted a profit of £244 million last year, compared with £76 million in 2014, a figure which included one-off costs associated with the firm’s restructuring and turnaround.

RSA posted a 437 percent increase in its underwriting profit last year to £220 million, compared with £41 million in 2014. Its core group combined ratio also improved to 96 percent in 2015, compared with 98.8 percent in the previous year.

The company did report a fall in its growth, however, with its gross written premiums decreasing to £6.86 billion last year, compared with £7.30 billion in 2014.

Stephen Hester, RSA Group chief executive, said: “2015 was a year of major achievement for RSA. As a result, the turnaround phase of our Action Plan is largely complete and we have good prospects of substantial further performance improvement.

“RSA is now a strong and focused international insurer with leadership positions in the UK, Scandinavia and Canada. The Group's strategic restructuring will complete in 2016 as remaining contracted disposals close.”

He added: “In 2015, we delivered both value and risk reduction from successful disposals, Solvency II approval and a positive UK pension agreement. We delivered strong and pleasing improvements in core business performance, with plenty more to come. We showed the promise of our customer offering, winning our largest new partnership agreement with Nationwide Building Society for their UK home insurance business.”

Hester also said that RSA is increasing its annual gross cost savings target to over £350 million by 2018 and raising its underlying return on tangible equity expectation to the upper half of our 12-15 percent target range by 2017 with further improvement to come thereafter.

“We see 2016 as the last major restructuring year with disposals and balance sheet work completing and the heavy lifting of core business improvement and cost reduction action continuing,” he added.

“We expect challenging markets and to rely on self-help to progress. Despite these headwinds we face the future with determination and confidence.”