26th Feb 2015 08:15
LONDON (Alliance News) - RSA Insurance Group PLC marked a swing to pretax profit in its last financial year by resuming dividend payments, which had been put on hold as part of a broad restructuring aimed at getting the insurer back on track.
RSA, which was hit by an accounting scandal in its Ireland operations in 2013, said it made a GBP60 million statutory pretax profit in 2014, compared with a GBP203 million pretax loss in the prior year. RSA said it will pay a 2 pence final dividend.
"RSA returned to profit in 2014 and to paying a dividend. Our customer franchises proved resilient. Current year underwriting profit (ex-Ireland) was improved to record levels. Successful disposals realised strong gains. Costs were cut and savings targets increased. However, the clean-up of past weaknesses was also expensive; and market headwinds, especially from exchange rate changes and low interest rates, are a drag on results," Chief Executive Stephen Hester said in a statement.
The former chief executive of Royal Bank of Scotland Group PLC, no stranger to a turnaround job, also said that RSA's performance targets in the medium term are unchanged, eyeing a 12-15% underlying return on net tangible assets and 35-45% tangible equity/net premiums.
RSA expects to "substantially" complete the group's strategic restructuring in 2015, while Hester also set out new cost saving targets.
"Our 2016 target of greater than GBP180 million underlying cost reduction has been raised to greater than GBP210 million and a new target of greater than GBP250 million set for 2017," Hester.
In addition, RSA said that Chief Financial Officer Richard Houghton will stand down from May 7. He will continue in his executive role until a successor is found.
Hester has been restructuring the insurer with the aim of strengthening its balance sheet and improving its profitability, which has seen a series of disposals and cost cutting, as well as a GBP773 million rights issue last March.
By Samuel Agini; [email protected]; @samuelagini
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