RSA 2018 results show firm ‘exposed to more volatility than expected’

RSA group CEO Stephen Hester welcomed the insurer’s increased headline profits in its 2018 results, but he said that at an underlying level the results were down and that the firm was taking decisive action to ensure a return to form in 2019.

Pre-tax profits were £480m in 2018 up 7 percent from  £448m in 2017. However, the group’s combined ratio worsened to 96.2 percent from 94 percent a year earlier.

Group net written premiums were £6.4 billion in 2018 down from 6.6 billion in 2017.

Stephen Hester, RSA group chief executive, said: “In 2018 RSA increased headline profits and dividends with a still attractive return on capital. At an underlying level however, the results represent RSA’s first down year since 2013. We believe strongly that 2019 will show a bounce back and are taking decisive action to that end.

“Much went well in 2018, with excellent results in many of RSA’s Personal Lines businesses and good progress on expenses and other strategic initiatives. However, adverse weather costs and challenging Commercial Lines results exposed us to more volatility than expected. This was most intense in the ‘London Market’ business which accounted for substantially all our underperformance in the second half. We announced significant portfolio exits and initiated major pricing and re-underwriting programmes during the year. We have also made management changes and increased reinsurance coverage for 2019. Our performance ambitions for RSA are high, and unchanged. We recognise the need to demonstrate resumed progress against them.”