TIDMRSA
RNS Number : 5793N
RSA Insurance Group PLC
10 May 2018
RSA Insurance Group plc
Q1 2018 Trading Update
10 May 2018
RSA reports further progress in Q1 2018
Gross written premiums up 1% versus the prior year(1)
Large loss ratio, expense ratio and attritional loss ratios
improved. Weather losses elevated due to a tougher winter
Stephen Hester, RSA Group Chief Executive, commented:
"We are happy with RSA's progress at this early stage of the
year. The underlying business is tracking consistent with our
ambitions overall, whilst winter weather volatility is a normal
part of our business. Headline profits are also strongly up,
reflecting the absence (as planned) of restructuring costs."
Trading update
Market conditions
Insurance market trends are largely unchanged versus 2017.
Market pricing remains subdued overall, except in portfolios
responding to industry losses.
Financial markets have shown modest upside in bond yields.
Stronger sterling FX rates and a weaker Swedish krona are a
headwind in nominal terms for RSA versus the prior year (impact
circa 2% in Q1).
Premiums
-- Group gross written premiums of GBP2,099m were up 1% at
constant FX rates(2) and in line with Q1 2017 at reported rates
-- Net written premiums of GBP1,517m were up 2%(1) on an
underlying basis(2) . At a headline level, reinsurance costs for
the triennial GVC renewal, a reduction in retention levels for
certain programmes and rate inflation in reinsurance areas such as
UK Motor dampened net written premiums by GBP197m. However, these
were budgeted in our plans
-- Q1 saw progress continue with customers, bounded by a
disciplined remediation approach where profitability is threatened.
In each region, we saw positive developments
-- In Scandinavia, Q1 saw 6%(1) underlying premium growth in our
Swedish Personal Lines business. Volume and rate both
contributed
-- In Canada, we closed the acquisition of Deeks, a Personal
Lines brokerage (specialising in Affinity business) with annual net
written premiums of circa $48m, which fits our Johnson division
very well
-- In the UK, our new Nationwide partnership is now in full
swing, delivering the customer and operating benefits we
anticipated and forming the basis for our platform rollout across
the rest of the UK business in coming years.
Please see footnotes overleaf
Profitability
-- Pre-tax profit for the first quarter was higher than Q1 2017,
although on an underlying basis it was lower due to elevated winter
weather costs being not fully offset by other improvements
-- Underwriting profit:
- Group weather costs were 5.1% of net earned premiums. This was
3.1 points higher than Q1 2017 and 1.9 points higher than the 5
year average of 3.2%, with all regions impacted. Poor weather
experience continued into April in Canada
- The large loss ratio improved to 9.7%, trending closer to the 5 year average of 9.0%
- The attritional loss ratio improved slightly versus Q1 last year
- The controllable expense ratio fell again
- Prior year development was more favourable than Q1 last year
-- Investment income was consistent with the range guided in February 2018.
Balance sheet and capital
-- Tangible shareholders' equity at 31 March 2018 increased to
GBP2,789m(2) (31 December 2017: GBP2,765m) and tangible net asset
value per share was 272p(2) (31 December 2017: 270p)
-- Balance sheet unrealised gains were GBP352m at 30 March 2018,
down GBP76m or 18% since year end, with the movement mainly a
function of higher bond yields
-- The Group's Solvency II coverage ratio(3) was 162% at 31
March 2018 (31 December 2017: 163%), with Tier 1 coverage at 96%
(31 December 2017: 98%).
(1) At constant FX
(2) The Group uses Alternative Performance Measures, including
certain underlying measures, to help explain business performance
and financial position. These measures have been calculated
consistently with those for the year ended 31 December 2017 and
reconciliations will be provided with the condensed consolidated
financial statements for the period ended 30 June 2018
(3) The Solvency II capital position at 31 March 2018 is
estimated
Enquiries:
Investors & analysts Press
Kerry McConnell Natalie Whitty
Group Director of Investor Group Head of External
Relations Communications
Tel: +44 (0) 20 7111 Tel: +44 (0) 20 7111
1891 7213
Email: kerry.mcconnell@gcc.rsagroup.com Email: natalie.whitty@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 10 May to discuss the Q1 Trading Update.
Participants should call +44 (0)800 358 9473 (toll free) or +44
(0)33 3300 0804, using participant pin code 31259867#. 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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