RSA CEO praises 'excellent' 2020 results ahead of £7.2bn takeover and split
UK insurer RSA Group's chief executive Stephen Hester praised the company's "excellent" underwriting results despite a drag on profits from COVID-19 in his last letter to shareholders before its anticipated takeover by Canadian insurer Intact Financial Corporation and Scandinavian insurer Tryg.
"In 2020 RSA produced excellent underlying profits, record underwriting results and a return on tangible equity of 18.2 percent, above the top end of the targeted range and exceptional for a capital intensive financial institution. This was our fourth record underwriting result in 5 years," he said.
Hester stated that the company's results for 2020 were a "remarkable achievement" reflecting 7 years of business building, and the high value placed on it was a testimony to its "strength and attractiveness", while noting that the group was "not looking to sell" but Intact and Tryg's £7.2 billion takeover bid offered "exceptional value" to its shareholders.
In the financial year 2020, RSA generated a net profit of £320 million, compared with £336 million in 2019. Its group combined ratio came in at 91.9 percent for full-year 2020, an improvement from 94.6 percent in the prior year.
However, the insurer's net written premiums were £6.22 billion, down from £6.42 billion in 2019, due to the estimated impacts of COVID-19. It noted that premiums were down 5 percent in the UK & International region, and 1 percent in both Scandinavia and Canada.
RSA said it will not propose the final dividend for 2020 as this would reduce the cash consideration payable under the terms of the acquisition.
Commenting on the results, Hester said: “We are pleased to report excellent results for RSA in 2020. Underwriting profits are sharply up to new record levels and return on tangible equity has risen above our target range.
"Naturally, the impact of COVID-19 was the major feature of our year, as for society as a whole. We prioritised the safety of our employees and sustaining service to customers. The Group paid out some £4.6bn in ‘normal’ claims whilst also providing for over £250m in COVID-19 specific claims, together with offering a range of other customer support measures.
"The Group has delivered on large parts of our “best in class” ambitions. The quality of earnings is excellent which augurs well for RSA’s prospects in 2021 and beyond. I am proud of the hard work, dedication and focus of all my colleagues in what was a difficult and turbulent year. We have built a high performing company and 2020’s results showcase the value creation thereby achieved. This in turn drove the 52% premium we were able to negotiate in Q4 through an all cash bid from Intact and Tryg. The Offer is on track to complete in the coming months, ending a chapter for RSA but not the whole story...”
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