RSA’s (RSA) efforts to improve underwriting in its commercial insurance business caused the group to miss earnings expectations during the first half of 2019, after £37m in restructuring costs dragged down pre-tax profits. As such, a 70 per cent surge in underwriting profit could still be seen as a disappointment, as the insurer re-wrote, re-priced or even let certain commercial lines lapse.
The combined operating ratio – calculated as claims costs as a proportion of premium income – improved to 94.3 per cent, from 94.7 per cent, excluding the impact of exiting certain portfolios within London markets. That result benefited from benign weather conditions, which offset lower reserve releases and a strong performance from personal lines.
Premiums within the latter segment were up 3 per cent, driven by Sweden and Denmark where rates and retention also improved. That was despite a 12 per cent reduction in UK personal premiums, of which 2 percentage points was due to business exits. On balance, personal lines' combined operating ratio came in at a respectable 89.9 per cent.
Analysts at Peel Hunt forecast adjusted net tangible assets of 292p a share at the December 2019 year-end, up from 279p at the end of 2018.
| RSA INSURANCE (RSA) | ||||
| ORD PRICE: | 562p | MARKET VALUE: | £5.80bn | |
| TOUCH: | 561-562p | 12-MONTH HIGH: | 646p | LOW: 490p |
| DIVIDEND YIELD: | 3.8% | PE RATIO: | 22 | |
| NET ASSET VALUE: | 375p* | COMBINED RATIO: | 95.2% | |
| Half-year to 30 Jun | Gross premiums (£bn) | Pre-tax profit (£m) | Investment return (£m) | Dividend per share (p) |
| 2018 | 3.95 | 296 | 169 | 7.3 |
| 2019 | 3.91 | 227 | 150 | 7.5 |
| % change | -1 | -23 | -11 | +3 |
| Ex-div: | 5 Sep | |||
| Payment: | 11 Oct | |||
| *Includes intangible assets of £825m, or 80p a share | ||||
