Our national obsession with the weather is evident in the recent roll-call of half-year returns, as customer-facing enterprises from pubcos to fashion chains bemoan the savage northern winter. In some instances, 'convenient' might be a more accurate description, but in the case of RSA Insurance (RSA) there’s more meat on the bone, as related weather costs of £155m came in at 4.9 per cent of net earned premiums, and well in advance of the five-year average.
That wasn't the only negative. The FTSE 100 insurer recorded a 5 per cent fall in net written premiums to £3.2bn on a constant-currency basis, and the underwriting profit declined 23 per cent to £171m. The combined ratio (incurred losses and expenses divided by earned premiums) weakened to 94.7 per cent, from 93.2 per cent in 2017.
Despite all of this, and unfavourable currency movements, a tight rein on costs enabled RSA to deliver a decent rise in reported profits. However, management notes “significant variations by region”, as a “relatively stable” backdrop in Scandinavia is set against softening in the UK and London, necessitating “volume trade-offs for underwriting discipline”.
JPMorgan Cazenove is guiding for net asset value per share of 373p for the December year-end, rising to 404p in 2019.
| RSA INSURANCE (RSA) | ||||
| ORD PRICE: | 641p | MARKET VALUE: | £6.59bn | |
| TOUCH: | 641-642p | 12-MONTH HIGH: | 683p | LOW: 591p |
| DIVIDEND YIELD: | 3.2% | PE RATIO: | 22 | |
| NET ASSET VALUE: | 417p | COMBINED RATIO: | 94.7% | |
| Half-year to 30 Jun | Gross premiums (£bn) | Pre-tax profit (£m) | Investment return (£m) | Dividend per share (p) |
| 2017 | 4.03 | 263 | 169 | 6.6 |
| 2018 | 3.95 | 296 | 169 | 7.3 |
| % change | -2 | +13 | - | +11 |
| Ex-div: | 6 Sep | |||
| Payment: | 12 Oct | |||
