Underwriting profits were up 14%, “driven by continued impressive performance from 123.ie, our direct insurer acquired in 2010, leading to a combined ratio of 94.2%”, it said, adding that the company gave guidance of an increase in both profits and premiums in ireland for this year.
The London-headquartered company with operations in the UK, Canada, Europe and emerging markets, performed well across most divisions, it said.
Simon Lee, RSA group chief executive, said: “These are a solid set of results demonstrating strong progress in challenging market conditions. We’ve seen good growth in premiums up 5% to £8.4bn.
“Operating profits of £684m have been impacted by the Italian earthquakes, extreme wet weather in the UK in the first half of the year and falling bond yields.
“We are continuing to execute our strategy of global growth while maintaining profitability and underwriting quality.
“In 2012 over 65% of our premiums were from outside the UK and as we move more of the business towards higher growth and higher margin markets, we are optimistic about our future growth prospects.”
Insurance companies have to hold a minimum level of sovereign bonds in their investment portfolios. But most triple-A rated sovereign bonds are trading at historically low yields, which is weighing on returns. However, RSA’s balance sheet remains in a healthy position with a 1.9 times cover for capital requirement.
“We are confident that we can deliver sustainable and ongoing improvements in the combined ratio and return on equity through management actions and we are not dependent on economic or market recovery to deliver these plans,” said Mr Lee.