Insurer RSA may produce record underwriting profits for the first nine months of 2016 and is planning to sell or reinsure £1 billion of legacy UK business, chief executive Stephen Hester said. 

RSA is in the middle of a large-scale restructuring under the stewardship of former Royal Bank of Scotland boss Hester.

The restructuring has included selling some overseas businesses and cutting costs. 

"My guess is that it would be our best ever nine months of underwriting profits ... because of the very active self-improvement programmes," Hester said today.

He made his comments after the insurer reported a 5% drop in net written premiums for the first nine months due to the impact of asset sales. 

Hester said RSA was "encouraged" by interest in its legacy insurance business, mainly old asbestos claims from as much as 50 years ago, and hoped to announce a deal by the time of the full-year results early next year. 

RSA's cost-cutting programme was likely to reach £250m by the end of 2016 against a £350m target by the end of 2018, chief financial officer Scott Egan said. 

The slide in sterling following Britain's vote to leave the European Union had helped RSA's earnings, as 70% of its operations are overseas, Hester said.

RSA has businesses in Ireland, Canada and Scandinavia as well as Britain. 

But the Bank of England's August interest rate cut had hurt the group's pension liabilities, causing a swing from a small surplus to a deficit of slightly more than £200m, the company's CEO added. 

As a result of the pension issues, tangible equity fell 4.5% to £3.179 billion as at September 30, from £3.32 billion at the end of the June quarter. 

RSA's net written premiums fell to £4.82 billion from £5.09 billion a year earlier, the company said in a trading statement. 

Last year, rival Zurich Insurance walked away from an agreed takeover of RSA due to problems in its own business.