Disposals drive RSA profits in Q3
Insurer RSA has seen the building blocks of its recovery come together in the third quarter of 2014, as disposals drove a profit increase.
Its net written premiums fell to £5.7 billion in the third quarter of 2014, down 9 percent compared with £6.7 billion in the third quarter of 2013.
The insurer said its profit was strong due to £198 million in disposal gains, but that the third quarter underwriting results was “weak overall.”
Disposals so far have totalled £740 million, of which £520 million is now completed, with a pro-forma benefit to tangible net assets of around £560 million, of which around £430 million is now completed. It added that further disposals are targeted over the next 12 months to complete the process.
RSA also launched a £400 million subordinated bond issue in early October with a coupon of 5.1 percent.
Stephen Hester, RSA group chief executive, said: “The building blocks to support RSA’s recovery are coming together. Since H1 we announced new disposals in Singapore, Hong Kong, China and Italy. The disposals of Noraxis, and our businesses in Poland, Lithuania and Estonia have completed, booking strong gains.
“Our capital position strengthened further through these disposals, and a £400 million subordinated bond issue in early October underlined RSA’s credit improvement. We are progressing well in the areas of cost reduction, underwriting actions and refreshing our management line-up.
“Overall, work continues towards meeting the medium-term performance targets we have set. Soft insurance and investment market conditions and a conservative outlook for prior year profit emergence seem likely to put even more emphasis on improving underwriting and cost re-engineering, which will take time to have full effect.”
