Stephen Hester, RSA Group Chief Executive, commented:
"We are making fundamental improvements to RSA, as promised. These interim results show excellent progress on all key measures. The foundations are being laid to improve still further.
“Profits are up strongly on both a headline and underlying basis. Premium income has been stabilised, underwriting and cost levers are responding positively. The interim dividend is restored and progress continues on strategic reshaping and capital strength.
“We are encouraged by the increasing momentum at this stage of our planned improvements."
Trading results
- Core Group premiums up 2% ex Group reinsurance programme. Overall Group net written premiums of £3.4bn down 3%1 year-on-year post disposals.
- Group operating profit £259m (H1 2014: £141m): UK £144m; Canada £92m; Scandinavia £55m.
- Group underwriting profit of £101m (H1 2014: £23m loss). Core Group combined ratio of 96.9% (H1 2014: 100.3%). Record underwriting profits in the UK and Canada (Combined ratios of 94.4% and 92.3% respectively). Underlying results in Scandinavia strong.
- Current year underwriting profit of £73m (H1 2014: £27m); current year attritional loss ratio of 57.1%, 1.2pts better than prior year (H1 2014: 58.3%). Weather and large losses £7m better than planned and £36m better than H1 2014.
- Prior year underwriting profit of £28m, within our expected range of 0-1% of net earned premiums. Positive development in Canada and the UK; net strengthening in Scandinavia.
- Ireland underwriting loss of £16m, much reduced from H1 2014 (£65m loss) - remediation continues. Improved underwriting result in Latin America despite impact of first quarter Chile floods.
- Investment income of £206m; full year outlook improved to c.£390m. Increasing bond yields during H1 are a positive for future earnings and economic capital ratios.
- Net gains of £169m include £140m from disposals completed in the first half. Reorganisation costs were £55m. No further ‘clean up’ charges in the period.
- Pre-tax profit was £288m (H1 2014: £69m). Post tax profit of £215m (H1 2014: £6m).
- Capital metrics at 30 June 2015: ECA surplus c.£1.0bn (up from £0.9bn at FY 2014) with coverage of 1.3 times; IGD surplus c.£1.7bn with coverage of 2.2 times.
- UK pension schemes at 30 June 2015 showed a £106m IAS19 surplus. At 31 March 2015 the funding level was estimated to be 97% (prior to any assumption changes or update of scheme data in the triennial review process).
- Tangible equity £2.9bn (31 December 2014: £2.9bn), 282p per share. Tangible equity to premiums ratio of 42%1 (31 December 2014: 39%).
- Reserve margin for the core Group increased to 5.2% of booked reserves.
- Underlying return on tangible equity of 9.7% (H1 2014: 6.4%).
- Interim dividend payment reinstated with a declaration of 3.5p per ordinary share.
