RSA results jump as restructuring delivers
RSA's operating profit jumped in 2016 on record underwriting profit and combined ratio as restructuring efforts deliver.
"In 2016 RSA took major strides forward, moving seamlessly from 'successful turnaround' to organic outperformance,” said CEO Stephen Hester. “Our improvements are both strategic and operational. They are delivering high quality sustainable results."
The group operating profit was up 25 percent at £655 million in 2016. Underwriting profit was up 73 percent at £380 million, a record high, according to the company. The “Core Group” combined ratio was 93.8 percent, and improvement from the 96.0 percent recorded in the previous year. Core group net written premiums grew to £6.28 billion from £5.90 billion in 2015.
The company said that the strategic restructuring and turnaround of RSA has been delivered ahead of expectations.
RSA completed the disposals of its businesses in Latin America and Russia in the first half of 2016. This brings to a close its principal disposal programme which reached total proceeds of £1.2 billion between 2014 and 2016.
In February 2017, RSA announced the disposal of £834 million UK legacy liabilities to Enstar, boosting its Solvency II coverage.
RSA continues to improve its performance by focusing on customer service, underwriting and costs.
The cost reduction programme is ahead of original targets with around £290 million of gross annualised savings achieved by the end of 2016, the company said. This performance has led the company to upgrade the cost savings target for a third time to above £400 million gross annualised savings by 2018 from previously £350 million.
Unlike the operating performance, after tax profit dipped in 2016 to £20 million from £244 million in 2015.
However, given the operational progress made in the past year and the legacy sale, RSA is raising its ROTE (return on tangible equity) target range to 13-17 percent. Additionally, it aims at moving towards 'best in class' combined ratio performance in its markets, which could allow it to exceed this higher range in time, the company said.
Today’s top stories
Profits tumble at Swiss Re yet growth surges
Greenlight Re heads back into profit as it resolves legacy issues
CFO of XL Group to retire; successor revealed
Alleghany enjoys solid growth but headwinds dent profits
Swiss Re group CUO quits to ‘start new chapter in life’
Did you enjoy reading this story? Sign up to our free daily newsletters and get stories like this sent straight to your inbox.
