Restructuring costs associated with existing unprofitable lines of business caused RSA Insurance (RSA) to miss consensus net profit expectations last year, but there were signs that underwriting discipline had started to improve. The insurer reported an underwriting profit of £405m, excluding exited business lines, up almost two-thirds on the prior year.
The commercial lines business's combined operating ratio – calculated as claims costs as a proportion of premium income – improved from 102 per cent to 100 per cent, or a profitable 98.6 per cent, excluding exited UK business lines. However, underwriting performance in Canada and Denmark remained weak, partly as a result of elevated weather-related and large losses.
Personal lines – which accounted for just over half of revenue – also improved profitability, posting a combined operating ratio of 88.5 per cent, excluding exits, compared with 92.5 per cent in 2018.
Analysts at Peel Hunt forecast adjusted net tangible assets of 298p a share at the December 2020 financial year-end, rising to 308p the same time the following year.
| RSA INSURANCE (RSA) | ||||
| ORD PRICE: | 514p | MARKET VALUE: | £5.30bn | |
| TOUCH: | 513.8-514p | 12-MONTH HIGH: | 600p | LOW: 497p |
| DIVIDEND YIELD: | 4.5% | PE RATIO: | 16 | |
| NET ASSET VALUE: | 375p | COMBINED RATIO: | 94.6% | |
| Year to 31 Dec | Gross premiums (£bn) | Pre-tax profit (£m) | Investment return (£) | Dividend per share (p) |
| 2015 | 6.86 | 106 | 381 | 10.5 |
| 2016 | 7.22 | 101 | 347 | 16.0 |
| 2017 | 7.60 | 448 | 350 | 19.6 |
| 2018 | 7.47 | 480 | 343 | 21.0 |
| 2019 | 7.46 | 492 | 296 | 23.1 |
| % change | -0.1 | +3 | -14 | +10 |
| Ex-div: | 5 Mar | |||
| Payment: | 14 May |
