R&SA upbeat despite profits fall

Royal & Sun Alliance unveiled a 14% fall in half-year profits today as it focused on its position as the UK’s second biggest general insurer.

The group said it was now a better balanced business and confident of meeting regulatory capital requirements following the sale of a number of assets, including its closed UK life assurance, fund for £850m (€1.3bn).

Operating profits from the reshaped group in the six months to June 30 were in line with City hopes, down to £301m (€450.2m) from £351m (€525m) a year earlier.

The company said its remaining UK businesses, including More Than, produced strong firs- half results with its combined operating ratio (COR) – a key industry measure of profitability – improving by 3.5% to 93.6%.

COR, which represents the amount of money spent paying out on claims and in costs for every £1 (€1.50) of premiums taken in, improved in both personal and commercial lines.

Chief executive Andy Haste said: “We’ve made strong progress on executing our strategy during the half while producing another set of good results from our ongoing businesses.”

The former boss of AXA Sun Life, who took the top job at R&SA in April 2003, said the sale of its life businesses in UK and Scandinavia had significantly derisked the company’s balance sheet.

He added: “Together with the work to optimise our debt structure it will also strengthen our capital position and gives us confidence of complying with the new regulatory regime.”

The overall COR and results performance continued to be adversely affected by restructuring in the United States, where a planned reduction in premiums were among factors to impact the figures.

The last two years has seen a period of significant change for the group as it attempts to boost its balance sheet position, including through a £960m (€1.4bn) rights issue.

R&SA said today that around £168m (€251.1m) in annual cost savings had also been achieved, including in the UK, where its number of offices fell from 93 to 34 and headcount was reduced by 6,000.