LONDON - General insurer Royal & Sun Alliance has reported a 79 percent surge in first-half profits even as its proposed exit from the US market reaches a decisive stage.
RSA said that its operating profits for the six months ending June 30 stood at £329 million as against the £184 million that was reported at the same time last year.
Britain's second-largest commercial insurer also revealed that its core business sections continued to prosper in the first half in spite of the tough economic conditions that hold the upper hand in the UK. RSA Chief Executive Andy Haste has come in for some serious praise by the same analysts who had written him off when he announced that the group was poised to achieve a positive growth. Commenting on RSA's strong position in the market, Barclays analyst Richard Schreuder said, "The stock is trading on 9.2 times the consensus earnings forecast for 2005, compared to Zurich Financial Services> on 8.2 times. Zurich has a better franchise in our view, while our forecasts for RSA are slightly below consensus."
RSA said that its net written premiums had risen to £2.9 billion as compared to £2.5 billion last year at the same time. The company added that the combined ratio of its core business had fallen to 92.0 percent from 93.2 percent last year. The combined ratio is the measure of profitability and any figure below 100 percent means that the ratio is positive for the companies. RSA is targeting a ratio of 96-97 percent for the current year. CEO Andy Haste was elated at the results in the first half and said, "It is tougher to win new business out there and we are very selective in what we will write." Commenting on the exit from the US, Mr. Haste stated, "The U.S. operation remains exposed to a number of risks and uncertainties, but we are confident that management actions will continue to reduce the group's exposure."
RSA has also entered into a bancassurance agreement with Swedbank, Sweden's fourth-biggest bank. As a part of this deal, RSA's motor and household insurance products will be routed through Swedbank. "Sweden is opening up to bancassurance. As (the pilot scheme) rolls out, it gives us access to over 770 branches and a potential 4 million new customers. This is a good deal, it is about pipeline growth," Haste commented.
RSA has pegged its interim dividend at 1.69 pence per share up from the 1.65 pence last year.
Posted
on : Sat, 13 Aug 2005 09:05 GMT | Loans News
By : Anne Philips
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