RSA’s (RSA) shares tumbled around 16 per cent on the day these full-year figures appeared - reflecting a decision to slash the final dividend by a third. Chief executive Simon Lee said the impact on earnings from "the material fall in bond yields" was to blame - a fact which surpressed the yield on RSA's investment book from 3.9 per cent to 3.6 per cent.
Operationally, however, RSA performed well enough. Even though weather-related claims added around 2 percentage points to the combined ratio of claims to premiums, it still only deteriorated by 0.5 percentage points in 2012 to a reasonably profitable 95.4 per cent. Premium rates are generally improving, too. In Canada and Scandinavia, for instance, rates rose on all business classes, with personal household rates up especially strongly - 11 per cent in Canada and 12 per cent in Scandinavia. And while UK personal motor rates fell 2 per cent, other UK classes all pushed rates higher - the UK commercial motor book, for instance, grew rates by 10 per cent. Despite the falling investment return, meanwhile, RSA's portfolio remains focused (89 per cent) on cash and bonds.
Berenberg Bank expects EPS of 12.1p for 2013 (2012: 9.7p) a dividend of 6.4p and net tangible assets (NTA) of 61p.
RSA INSURANCE (RSA) | ||||
|---|---|---|---|---|
| ORD PRICE: | 117.4p | MARKET VALUE: | £4.22bn | |
| TOUCH: | 117.3-117.4p | 12-MONTH HIGH: | 137p | LOW: 97p |
| DIVIDEND YIELD: | 6.2% | PE RATIO: | 12 | |
| NET ASSET VALUE: | 104p | COMBINED RATIO: | 95.4% | |
| Year to 31 Dec | Net premiums (£bn) | Pre-tax profit (£m) | Investment return (£bn) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 6.46 | 759 | 0.68 | 7.71 |
| 2009 | 6.74 | 554 | 0.62 | 8.25 |
| 2010 | 7.46 | 474 | 0.63 | 8.82 |
| 2011 | 8.14 | 613 | 0.75 | 9.16 |
| 2012 | 8.35 | 479 | 0.53 | 7.31 |
| % change | +3 | -22 | -29 | -20 |
Ex-div: 3 Apr Payment: 24 May | ||||
