INSURANCE group RSA is targeting international growth, after reporting a fall in annual profits today, due to increased weather claims in the UK last year and the Chilean earthquake.
The group, which employs about 1,200 staff in Liverpool, revealed an 11% increase in net written premiums of £7.45bn in 2010, but pre-tax profits fell 14% to £474m.
A COR – combined operating ratio which represents the amount of money spent on claims and costs for every £1 of premiums taken –of 96.4% included 3.5 points of weather losses worse than normal levels.
The freezing conditions in November and December resulted in an increase in burst water pipe claims on household insurances. The cost of the Chilean earthquake to RSA stands at £30m.
However, the group completed its UK cost reduction programme which generated £70m of savings and increased its international spread with acquisitions in Canada, Ireland, Sweden, Denmark and Oman.
Chief executive Andy Haste said: “This is a strong top line and robust underwriting performance in what has been an extremely tough year for the industry.”
But looking forward he added: “We have built a portfolio of high performing operations with strong positions in attractive markets and exciting potential.
“In 2011 we expect to deliver top line growth and a much improved underwriting result in the UK, around 10% growth and strong profitability in international, and double digit growth in emerging markets.
“We are setting a new target to double emerging markets premiums to around £2.2bn by the end of 2015 and will continue to focus the group towards international and emerging markets, and expect these two regions to represent around 70% of net written premiums the next five years.”
Liverpool stockbroker Panmure Gordon said today: “RSA’s 2010 results were largely pre- announced following the announcement of abnormal weather loses in January, so these figures will come as no surprise.”
It added: “While the guidance for 2011 is good with a sub-95% COR, the share price is close to our target price and so we have lowered our recommendation to ‘hold’ (from ‘buy’).”
