3rd Nov 2016 10:58
LONDON (Alliance News) - RSA Insurance Group PLC said Thursday its profit levels for the year to date are ahead of its previous expectations, despite a slight falloff in underwriting levels in the third quarter.
FTSE 100-listed RSA reported its net written premiums for the nine months to September 30 across its entire operations were down 5% year-on-year at GBP4.82 billion from GBP5.09 billion. Core net written premiums were up 6% at GBP4.55 billion from GBP4.21 billion year on year, although RSA said on a constant currency basis they were down slightly.
Net written premiums grew strongly over the nine months to September 30 in RSA's Scandinavia business, up 6% to GBP1.34 billion from GBP1.27 billion at the same date in 2015.
Growth in the UK & Ireland business was more subdued at 1% to GBP2.16 billion from GBP2.13 billion and in Canada, up 1% to GBP1.03 billion from GBP1.01 billion. RSA said UK personal premiums were down slightly, while commercial lines saw modest growth.
RSA said its profitability on underwriting, operating and after-tax measures is strong and ahead of its expectations. The insurer also noted its year-to-date attritional loss ratios show year-on-year improvements across all of its core regions.
However, weather event costs for the core RSA group have increased to 3.2% of net earned premiums for the year to date from 1.5% for the same nine month period in 2015, although they remain roughly in line with the company's planning assumption of around 3.0%.
Large losses for the core group have also risen year-on-year in the nine mnth period, to GBP411 million and 9.0% of net earned premiums, from 8.3% in 2015, compared to a planning assumption of 8.5%.
RSA noted that its investment performance remains in line with its most recent guidance despite volatile markets, on track to provide around GBP350 million of full year income, offset by around GBP60 million in discount unwind.
RSA also flagged that it has seen a partial reversal in some post-Brexit financial movements in October, with bond yields rising and spreads widening.
RSA said its Solvency II coverage was 151% at September 30, down from 158% at June 30 but "well within the upper part of our target range". RSA said the coverage ratio represents a surplus of around GBP1.0 billion and added that coverage strengthened in October.
"Momentum in the business is excellent across the many improvements to customer service, underwriting effectiveness and cost efficiency we are driving through. Brexit provides us an attractive tailwind from overseas earnings translation, in the context of an otherwise challenging environment," said Stephen Hester, RSA chief executive.
"While fourth quarter can be a bumpy underwriting period, RSA is on track for strong operating earnings increases for 2016 overall," added Hester.
Shares in RSA Insurance were up 0.5% at 546.50 pence Thursday morning.
By Adam Clark; [email protected]
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