8th May 2014 10:16
LONDON (Alliance News) - RSA Insurance Group PLC Thursday reported a decrease in first-quarter net written premiums on both an underlying and headline level, as the insurer undertook a more disciplined underwriting approach across its regions and continued to work on turning around its fortunes.
In a statement, RSA said net written premiums fell to GBP1.98 billion in the first three months of 2014, compared with GBP2.34 billion in the corresponding period a year earlier, a 15% fall. RSA said that at constant exchange rates the decline was lower at 9%. On an underlying basis, which excludes items such as the adverse development cover purchased during the quarter, net written premiums fell by 4%, RSA said.
The insurer said underlying profit trends are broadly in line with its expectations. RSA said it had "good results" in Scandinavia and emerging markets and weaker results in the UK, Ireland and Canada. Underlying current year loss ratios across the businesses are in line with the insurer's expectations. RSA said expenses are being cut, though that is needed to compensate for premium reductions.
RSA said it booked GBP111.00 million in weather costs over the quarter, including about GBP60.0 million in the UK. In addition, around GBP10.0 million more claims from the December 2013 storms in the UK were booked in the quarter as an adverse prior-year development.
RSA said it's too early to forecast whether the costs will or won't be offset, and to what extent, by weather trends in the rest of the year. In the corresponding quarter of 2013, which RSA described as "relatively benign", weather costs totalled GBP28.0 million.
The earthquake that struck Chile in April is likely to have cost between GBP15.0 million and GBP20.0 million, RSA said, adding that weather trends elsewhere during the month were benign.
"Profit for the quarter was boosted by disposal gains from our equities portfolio and a Swedish property sale. We are evaluating the write down of goodwill in Ireland where we have taken some further moderate charges to strengthen margins and complete the actions previously announced. There will be other gains and provisions likely during the year as the foundations are laid for progress against our business and financial goals," RSA said in a statement.
"There has been intense activity in the first quarter of 2014. We set out a clear action plan in February to transform the performance of the business and have made a good start in implementing it. We are especially grateful to shareholders for supporting RSA?s new direction and the rights issue which has now completed," Stephen Hester, chief executive, said in a statement.
"There remains much to do and we operate in a challenging and competitive market place. 2014 is a foundation year, but one where we hope to make solid progress. Our priorities will be consistent: to serve customers well; operate with capital strength; and focus on driving shareholder value," Hester added.
In April, RSA announced the sale of its operations in the Baltics and Poland for GBP300 million in cash, part of its effort to shore up its balance sheet it the wake of its problems in Ireland. The insurer also was forced to launch a GBP773.0 million rights issue as part of a package of measures to shore up its balance sheet in the wake of the Irish losses.
RSA Thursday said its investment portfolio grew 2% in the quarter to GBP13.97 billion, as a result of net cash inflows, partly offset by foreign exchange losses. The rights issue proceeds, received after the quarter end, have since added a further GBP747 million to the portfolio.
The measures also included the scrapping of its dividend, a cover policy underwritten by Berkshire Hathaway, and plans to raise GBP300 million from business disposals in 2014.
It swung to a loss in 2013 due to the Irish losses and by a surge in weather-related claims because of severe flooding in parts of southern and south-west England and bad weather across Europe.
RSA shares were Thursday quoted at 97.20 pence, down 0.7%.
By Samuel Agini; [email protected]; @samuelagini
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