Rate increases drive growth in RSA’s Irish insurance business

British insurer RSA on Thursday said that premiums for its Irish business rose 11 per cent in the first half of the year, on the back of hefty rate increases, as it returned to operating profitability in the first half of the year.

RSA has undergone a turnaround under ex-Royal Bank of Scotland boss Stephen Hester, who has streamlined the business to focus on markets in Britain, Ireland, Scandinavia and Canada.

This includes the restructuring of its Irish operation following the emergence in 2013 of irregularities in its claims and finance functions, and issues around bodily injury claims.

First-half net written premiums were up 11 per cent year-on-year at constant exchange, RSA said, with rate increases of 18 per cent and volume reductions of 7 per cent. Premiums were up strongly in both personal and commercial lines driven by the strong rate increases.

However, RSA is still in the red, reporting a loss of £1 million, compared with a £16 million loss for the same period in 2015, and had a a combined ratio of 100.7 per cent.

“The business also returned to operating profit in the first half,” RSA said.

Looking to the rest of this year, RSA said it expected underlying premium trends to continue.

Transformation

“The challenging market environment, in particular for claims inflation, demands that securing adequate rate remains a key focus area for the business. The delivery of our ongoing transformation plans is also a priority, including those relating to underwriting and pricing excellence, and cost reduction,” RSA said.

On a group basis RSA reported record first-half underwriting profits of £119 million and raised its interim dividend by more than 40 per cent. Pre-tax profit for the six months to June 30th came in at £148 million, RSA said in a statement.

This was ahead of a company-supplied consensus forecast for £131 million and down from £288 million in the first half of 2015 which was boosted by disposal gains.

The company maintained its medium-term return on equity of 12-15 per cent. In the first half, this figure, which is a measure of profitability, was 12.8 per cent.

Mr Hester said Britain's vote in June to quit the European Union raised challenges and uncertainties for RSA, but that it had so far been a net positive for RSA thanks to a weakening of sterling, which has boosted the value of earnings abroad. – (Additional reporting Reuters)