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Insurer shrugs off floods

Hester hails RSA turnaround ‘largely complete’

Hester smile vidRSA chief executive Stephen Hester said the insurer shrugged off the floods and said its turnaround was “largely complete”.

The firm unveiled an operating profit of £523m, up 43% on 2014. Underwriting profit rose 437% to a record, post-tax profit was up 221% and the company is proposing a f final dividend 7p per share, up 250%.

Mr Hester said: “2015 was a year of major achievement for RSA. As a result, the turnaround phase of our Action Plan is largely complete and we have good prospects of substantial further performance improvement.

“RSA is now a strong and focused international insurer with leadership positions in the UK, Scandinavia and Canada. The Group’s strategic restructuring will complete in 2016 as remaining contracted disposals close. The power of increased simplicity and focus is already helping drive better performance. RSA is well placed for a bright long-term future.

“In 2015, we delivered both value and risk reduction from successful disposals, Solvency II approval and a positive UK pension agreement. We delivered strong and pleasing improvements in core business performance, with plenty more to come. We showed the promise of our customer offering, winning our largest new partnership agreement with Nationwide Building Society for their UK home insurance business.

“We are today increasing our annual gross cost savings target to over £350m by 2018 and raising our underlying return on tangible equity expectation to the upper half of our 12-15% target range by 2017 with further improvement to come thereafter.

“We see 2016 as the last major restructuring year with disposals and balance sheet work completing and the heavy lifting of core business improvement and cost reduction action continuing. We expect challenging markets and to rely on self-help to progress. Despite these headwinds we face the future with determination and confidence.”

Trading results

  • Core Group premiums up 1%. Overall Group net written premiums of £6.8bn down 3% year-on-year driven mainly by disposal programme.
  • Group operating profit £523m (2014: £365m): Scandinavia £163m; Canada £182m; UK £175m.
  • Group underwriting profit of £220m (2014: £41m). Core Group combined ratio of 96% (2014: 98.8%). Strong underlying results across Scandinavia, Canada and the UK; Record underwriting profit in Canada with combined ratio of 91.7%.
  • Record group current year underwriting profit of £129m (2014: £73m); Core Group current year attritional loss ratio 1.9pts better than prior year on an underlying basis.
  • Weather and large losses £68m worse than planned and £20m better than 2014; Net cost of the December weather events was £76m.
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