9th May 2019 08:40
LONDON (Alliance News) - RSA Insurance Group PLC said Thursday its first quarter was in line with its own expectations, but it is still seeing "competitive" market pricing.
In the three months to March 31, the FTSE 100-listed general insurer recorded net written premiums of GBP1.57 billion, 3% higher that the year before. Taking into account planned exits, foreign exchange movements and reinsurance charges, written premiums were flat.
"Insurance market conditions are largely unchanged versus 2018. Market pricing is competitive overall, although it is accommodating underwriting actions in those portfolios responding to industry losses," the company said.
RSA's Scandinavia business saw a 3% growth in written premiums, at constant exchange rates, driven by the unit's Personal Lines business. The company said both volumes and rates contributed to the performance. Commercial Lines written premiums increased 2% in the region.
In Canada, premiums increased 8% in local currency, driven by pricing increases and "continued volume growth" in Personal Lines. RSA said the Canadian's unit's Commercial Lines saw a "premium contraction reflecting planned underwriting actions in loss affected lines".
The company's UK & International unit saw premium income fall 5%, "broadly" in line with management expectations. RSA said the decrease reflected pricing and underwriting actions in 2018 and in 2019 to date. "We are generally achieving targeted rate and other underwriting actions so far in 2019," RSA added.
"Our focus in 2019 is to continue improving for customers, to grow our business where underwriting conditions permit, and to re-price and underwrite in those business lines which saw difficult results in 2018, as well as completing the portfolio exits announced," said RSA.
RSA's group operating profit in the first quarter was "in line on a reported basis", on an improved combined ratio offset by "slightly" lower investment income.
RSA said its weather, large loss attritional loss and controllable expense ratios all improved versus the prior year.
The company's weather costs were 3.2% of net earned premiums, 1.9 basis points lower than the corresponding period a year earlier. Weather costs were "significantly" higher than prior year in Canada but lower in the UK & International division, the company said.
RSA's large loss ratio improved to 8.5%, from 9.7% last year, which was driven by better results in the UK.
"RSA's first quarter results are in-line with our demanding plans for the period. While still early in the year, extensive underwriting actions are also on track, responding to 2018's challenges. We remain focused on delivering positively for customers and shareholders in 2019," said Chief Executive Stephen Hester.
RSA's tangible shareholders equity at the end of the quarter was GBP2.9 billion, unchanged from December 31.
The insurer's solvency II ratio coverage ratio ended the period at 164% compared to 170% at the end of 2018. RSA said the reduction reflects long-dated sterling bond spread volatility on discounted pension values, as well as foreign exchange and bond yield movements.
A ratio of 100% means a company can meet all of its risk obligations.
"Financial markets have produced some headwinds in the first quarter. The reduction in bond yields and credit spreads, if sustained, has an impact on future investment income and a short term volatility impact on UK pension accounting. Stronger sterling foreign exchange rates and a weaker Swedish Krona are a headwind in nominal terms for RSA versus the prior year," RSA said.
Shares in RSA were up 1.4% Thursday morning at 542.00 pence each.
Related Shares:
RSA.L