RSA's net written premiums down in first quarter as shakeup continues

Thursday 08 May 2014 18.47
RSA reported a 24% drop in the net value of premiums written in Ireland over the first three months of 2014
RSA reported a 24% drop in the net value of premiums written in Ireland over the first three months of 2014

British insurer RSA said net written premiums fell in the first quarter of the year as a turnaround plan involving disposals and more disciplined trading took hold.

In a trading statement, RSA said underlying net written premiums were 4% down from a year earlier.

The insurer's new chief executive Stephen Hester said the quarter saw "intense activity" as the group shook up underperforming portfolios while poor weather in Canada, the UK and Ireland impacted profits.

The company is in the middle of a root and branch shakeup, steered by Hester after weather related losses and accounting irregularities at its Irish arm hit RSA's finances.

The company reported a 24% drop in the net value of premiums written in Ireland over the first three months of the year.

It saw £75m in net premium income from Ireland in its first quarter results, down from £99m last year.

RSA took a £200m hit last year after discovering a hole in its Irish accounts. It realised that reported profitability and the level of reserves, money set aside to cover future claims, had effectively been overstated.

It said today that total weather costs of £111m were booked for the first quarter, including costs of around £60m in the UK. This compares to total group weather costs of £28m in the first quarter of last year, which it described as a relatively benign quarter. 

An earthquake in Chile in April is likely to have cost RSA £15-20m, the company said today.

In February, the company began a drive to raise up to £1.6 billion in capital and tapped shareholders for around half in a rights issue that finished in April.
              
The "Action Plan" also involves disposing of non-core assets and streamlining the remaining operations.              
RSA has already secured the sale of operations in the Baltics and Poland and said it expects to announce more disposals during 2014.
              
The company said it expects premiums could be up to 10% lower for the full year as a result of the disposals.
              
Hester said premiums and profits trends remained in line with expectations, though market conditions were challenging and the company had much to achieve in its turnaround notwithstanding "intense activity" in the first quarter.
              
"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," he said.