TIDMRSA
RNS Number : 1095E
RSA Insurance Group PLC
04 May 2017
RSA Insurance Group plc
Q1 2017 Trading Update
4 May 2017
RSA reports continued good progress in Q1 2017
Premium income(1) up 14% (4% at constant exchange)
Strong underwriting results; attritional loss ratios and
expenses improved again
Successful completion of UK legacy disposal and capital
restructuring
Stephen Hester, RSA Group Chief Executive, commented:
"The year has begun well for RSA. Results to date are strong
with key proof points for further progress coming through
positively.
"We also completed the UK legacy disposal and related capital
restructuring successfully, to reduce risk, improve capital
resilience and boost profits.
"The Group's entire focus is now on our drive for outperformance
- serving customers and shareholders."
Trading update
Market conditions
-- Insurance and financial market conditions are largely unchanged.
Premiums
-- Group net written premiums of GBP1,710m for Q1 2017 are up
14%(1) as reported, and up 4%(1) at constant fx rates, versus Q1
2016.
(1) Excluding impact of Latin America & Russia disposals in
2016.
-- This improved trend reflects the capability enhancements we have been implementing.
-- Volumes accounted for 2% growth in the quarter, with rate increases also adding 2%.
-- Scandinavian premiums of GBP664m were up 14% as reported and
up 2% at constant fx. Volume growth was flat with rating increases
of 2%.
-- Premiums in Canada of GBP267m were up 28% as reported and up
6% at constant fx. Volume growth was 1% with rating increases
accounting for a further 1% growth. There was also a 4% benefit
from lower reinsurance costs. Growth was particularly good in the
broker channel, and retention rates improved across the
business.
-- UK premiums of GBP629m were up 10% as reported and up 7% at
constant fx with volume growth of 5% and rating increases adding
2%. New business levels were higher than a year ago and retention
was strong across the business.
-- Premiums in Ireland of GBP62m were flat as reported and down
10% at constant fx; Middle East premiums of GBP59m were up 23% as
reported and up 7% at constant fx.
Profitability(1)
-- Operating profit in the first quarter was strong and ahead of our plans.
-- Underwriting performance was also strong and included:
- The attritional loss ratio, expenses and expense ratios all
better than prior year, as targeted;
- Weather and large loss ratios of 2.0% and 9.8% respectively
(versus long term averages of c.3% and c.8.5%). Weather experience
was relatively benign across the Group with the exception of Canada
which saw the impact of windstorms across Newfoundland and Ontario
in March;
- A net charge (after release of FY16 margin build) of c.GBP40m
in the UK relating to the change in Ogden discount rate. However,
this was more than offset by positive reserve development elsewhere
in the Group. As a result, prior year profits were in line with our
expectations overall.
-- The investment result was consistent with current year guidance.
-- Below the Q1 operating result we have booked (as flagged at
our 2016 full year results) a net realised gain of GBP67m in
relation to the disposal of our Legacy liabilities, the GBP22m cost
for commutation of the adverse development reinsurance cover, a
charge of GBP56m for premium paid on the debt buybacks completed at
the end of March, and planned charges relating to our
cost/reorganisation activities.
Balance sheet and capital
-- At the end of March, we announced the successful completion
of our planned capital actions for 2017. These actions comprised
the disposal of our UK Legacy liabilities (announced in February);
issuance of c.GBP300m of restricted tier 1 notes in Scandinavia;
and retirement of GBP592m of existing high coupon debt.
-- Following these actions, we expect reduced interest costs of
c.GBP54m for 2017 and a little over GBP40m in 2018 (2016:
GBP99m).
-- Tangible shareholders' equity at 31 March 2017 was GBP2,875m
(31 December 2016: GBP2,862m) and tangible net asset value per
share was 282p.
-- Balance sheet unrealised gains were GBP545m as at the end of
the first quarter, down GBP84m or 13% since year end. The movement
reflects the realisation of gains on the transfer of assets to the
buyer of our Legacy liabilities, together with the pull to par of
other unrealised gains in the quarter.
-- The Group's Solvency II coverage ratio was 166%(2) at 31
March 2017 (31 December 2016: 158%), with tier 1 and 2 capital
providing 151% coverage.
-- The increase in coverage ratio since year end includes the
benefit of the Legacy disposal, partly offset by the net reduction
in debt. There were further impacts from profits in the quarter and
the accrual of a 'notional'(3) dividend for the first quarter.
Market movements were modestly positive in the aggregate. (1)
(2)
The Solvency II capital position at 31 March 2017 is
estimated.
(3) This 'notional' amount should not be considered in any way
to be an indication of actual dividend amounts, if any, for the
2017 financial year.
Enquiries:
Investors & analysts Press
Rupert Taylor Rea Alice Hunt
Director of Investor Relations Director of External Communications
Tel: +44 (0) 20 7111 7140 Tel: +44 (0) 20 7111 7305
Email: rupert.taylorrea@gcc.rsagroup.com Email: alice.hunt@gcc.rsagroup.com
Laura de Mergelina
Investor Relations Manager
Tel: +44 (0) 20 7111 7243
Email: laura.demergelina@gcc.rsagroup.com
Conference call for analysts and investors
A conference call for analysts and investors will be held at
08:30am on Thursday 4 May to discuss the Q1 Trading Update.
Participants should call +44 (0)808 237 0030 (toll free) or +44
(0)20 3139 4830, using participant pin code 46119506#. A recording
of the call will be available via the company website
(www.rsagroup.com).
Important disclaimer
This press release and the associated conference call may
contain 'forward-looking statements' with respect to certain of the
Group's plans and its current goals and expectations relating to
its future financial condition, performance, results, strategic
initiatives and objectives. Generally, words such as "may",
"could", "will", "expect", "intend", "estimate", "anticipate",
"aim", "outlook", "believe", "plan", "seek", "continue" or similar
expressions identify forward-looking statements. These
forward-looking statements are not guarantees of future
performance. By their nature, all forward-looking statements are
inherently predictive and speculative and involve risk and
uncertainty because they relate to future events and circumstances
which are beyond the Group's control, including amongst other
things, UK domestic and global economic business conditions,
market-related risks such as fluctuations in interest rates and
exchange rates, the policies and actions of regulatory authorities,
the impact of competition, inflation, deflation, the timing impact
and other uncertainties of future acquisitions or combinations
within relevant industries, as well as the impact of tax and other
legislation or regulations in the jurisdictions in which the Group
and its affiliates operate. As a result, the Group's actual future
financial condition, performance and results may differ materially
from the plans, goals and expectations set forth in the Group's
forward-looking statements. Forward-looking statements in this
press release are current only as of the date on which such
statements are made. The Group undertakes no obligation to update
any forward-looking statements, save in respect of any requirement
under applicable law or regulation. Nothing in this press release
shall be construed as a profit forecast.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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