Positive reserve development helps RSA absorb £40m Ogden hit
UK insurer RSA incurred a net charge of around £40 million in the UK relating to the change in Ogden discount rate but was able to more than offset it through positive reserve development elsewhere in the group, the company said in its 2017 Q1 trading update.
Operating profit in the first quarter was strong and ahead of its plans, RSA noted in the statement.
“The year has begun well for RSA. Results to date are strong with key proof points for further progress coming through positively,” said Stephen Hester, RSA CEO.
“We also completed the UK legacy disposal and related capital restructuring successfully, to reduce risk, improve capital resilience and boost profits.”
In February, Bermuda legacy specialist Enstar entered an agreement to reinsure RSA Insurance Group's UK liability legacy business of approximately £957 million.
In the first quarter, RSA booked a net realised gain of £67 million in relation to the disposal of the legacy liabilities. In addition, the first quarter results included £22 million cost for commutation of the adverse development reinsurance cover and a charge of £56 million for premium paid on the debt buybacks completed at the end of March.
Group net written premiums were up 14 percent year-on-year in the first quarter at £1.71 billion. At constant exchange rates, however, the increase was 4 percent over the period. Volumes accounted for 2 percent growth in the quarter, with rate increases also adding 2 percent, the company noted.
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