This is an odd time for insurers. On the one hand, they have been faced with moribund interest rates and falling premium income. On the other, they have benefitted from reduced claims frequency. RSA Insurance (RSA) chief executive Stephen Hester believes that the various impacts of Covid-19 on operating profits were “broadly neutral” at the half-year mark.
The group's combined ratio, which gauges underwriting profitability, fell by 190 basis points to 92.2 per cent from the 2019 half-year, while net written premiums contracted by 3.4 per cent to £3.14bn.
Meanwhile, RSA recorded a 13 per cent hit on its investment income on 2019, as it was forced to reinvest at lower yields, with the average return on its major bond investments down 30 basis points to 1.9 per cent.
However, with cars garaged and burglars stymied by the lockdown, non-Covid-19 claims frequency over the second quarter was down in a wide range of 15-60 per cent, although claim numbers started to ratchet up throughout June.
Consensus forecast adjusted EPS is 42.4p for the full year, rising to 46.89p in 2021.
| RSA INSURANCE (RSA) | ||||
| ORD PRICE: | 420p | MARKET VALUE: | £4.33bn | |
| TOUCH: | 420-421p | 12-MONTH HIGH: | 737p | LOW: 321p |
| DIVIDEND YIELD: | NIL | PE RATIO: | 13 | |
| NET ASSET VALUE: | 452p | COMBINED RATIO: | 92% | |
| Half-year to 30 June | Gross Premium (£bn) | Pre-tax profit (£m) | Investment return (£m) | Dividend per share (p) |
| 2019 | 3.91 | 227 | 150 | 7.5 |
| 2020 | 3.75 | 211 | 77.0 | nil |
| % change | -4 | -7 | -49 | - |
| Ex-div: | - | |||
| Payment: | - | |||
