R&SA insurer boosted by trading rival

The recovery of Royal & Sun Alliance gathered pace today after the UK-based insurer posted a doubling of profits in the first nine months of the year.

More Than owner R&SA said its core businesses in the UK, Scandinavia and International all managed strong performances, while the company reported further progress in stabilising and derisking its US-based operation.

Operating profits for the nine months were £488m (€666.4m) against £241m (€358.5m), even though the company faced a series of adverse weather costs, including floods in the UK and India plus storms in Scandinavia and Canada.

R&SA also cut its earlier estimate of claims worth £25m (€37.2m) from Hurricane Katrina to £14m (€20.8m), while Hurricane Wilma in October is expected to knock £10m (€14.9m) from the fourth-quarter result.

The company has focused on its position as the UK’s second-largest general insurer since selling its life assurance fund for £850m (€1.3bn) last year.

Efforts to strengthen its balance sheet have included the closure of its final salary pension schemes, which will reduce the deficit in the fund by £126m (€187.4m) after tax. It has cut risk in the United States followed an underwriting loss of £651m (€968.2m) two years ago.

Underwriting profits in the UK were £111m (€165.1m), an improvement of 66% despite the impact of a competitive market.

The More Than brand achieved a combined operating ratio of 94.5%, better than the 96% seen a year earlier as the measure reflects the amount of money spent paying out on claims and in costs for every £1 (€1.50) of premiums taken in.

Web sales grew strongly and now account for around 50% of its new motor business following improvements made to the service.