Insurance giant RSA cuts Irish losses by 73%

Operating losses at the Irish arm of insurance giant RSA declined by over 70% last year as the company’s recovery continued following the 2013 accountancy scandal which resulted in a change in the group’s leadership and the disposal of a number of assets.

RSA has been talking up its recovery since former Royal Bank of Scotland chief Stephen Hester took over from Simon Lee at the end of 2013 after a loss-making year accentuated by weather-related claims in the UK and a €274m accounting scandal in Ireland.

Yesterday, RSA reported a group operating profit of £523m (€662m) for 2015; up 43% on the previous year and record underwriting profit growth of 437%, despite flood damage in the UK.

Its Irish operations generated operating losses of £26m, down from £97m in 2014 — leading management to reiterate its forecast that it will return to profit in Ireland in 2016.

“Our goal remains to return the business to operating profitability in 2016 through continued underwriting improvement and cost reduction,” management said regarding its Irish division.

It added that the group’s performance improvement plan in Ireland is “progressing”. Underwriting losses, here, fell from £108m to £35m last year.

“In Ireland, we continue to make strong progress in remediation. Underwriting losses have reduced and premiums stabilised in the second half.

"Full-year premiums of £261m were down 4% at constant foreign exchange versus 2014. Personal premiums were down 8%, whilst commercial premiums were up 4%.”

“RSA notes that the impact of weather and large losses on its Irish outcome, taken together, was broadly in line with long-term averages,” noted Emer Lang of Davy Stockbrokers.

“However, within this, weather losses were relatively low despite the December storms [Ireland accounted for £3m of the overall group net storm cost of £76m] and large losses relatively high. Significantly, its current year attritional loss ratio of 74.2% was improved from 80.3% in 2014 and it expects this to improve further.”

A full-year dividend of 10.5p was proposed for 2015, with management set to pay out 40%-50% of earnings per share over the medium term.

“RSA is a valuable company. We can make it much more valuable. We are on a course to do just that,” Mr Hester said.

Scott Egan, CFO, takes the podium to present headline figures - 2015 Full Year #RSAresults pic.twitter.com/86CLmQJZqE

— RSA Insurance Group (@rsagroup) February 25, 2016