INSURANCE group RSA surprised markets today with better-than-expected figures, and the departure of chief executive Andy Haste.
The firm, which employs about 1,200 staff at its Old Hall Street base in Liverpool, reported record first half underwriting and operating results for the six months to June 30.
An underwriting figure of £206m was a 51% improvement on a year ago and the operating result of £467m was 22% better.
Net written premiums grew 10% to £4.18bn and pre-tax profits were 25% ahead at £367m
The COR – combined operating ratio representing the money spent on claims and costs for every £1 of premiums taken – was 93.2%, which was a 1.6% improvement on the previous year.
Today’s update also reiterated that the group is on track to double premiums from emerging markets to around £2.2bn by the end of 2015.
Chief executive Andy Haste said the improvements were achieved despite costs from natural disasters including the Japanese tsunami, New Zealand earthquakes and Australian floods.
He said: “We have made a strong start to the year on both the top and bottom line.
“Premium growth of 10% is driven by rate, targeted organic initiatives and the benefit of 2010 deals.
“The underwriting result is up by 51% and operating profit by 22%, despite the impact of the first quarter catastrophe events, demonstrating the benefits of our focus on underwriting discipline and our strong and diversified portfolio.”
He added: “We approach the second half of 2011 with confidence. While market conditions remain challenging, we continue to expect to deliver targeted profitable growth in the UK, around 10% growth in international and double digit growth in emerging markets.
“As it stands today, and assuming a continuation of more normal levels of weather losses, we also expect to deliver a combined (COR) for the group of better than 95%.”
International markets represent the biggest portion of premiums and showed an 11% rise and a COR of 87.9%.
The UK also delivered a “strong top line performance in what remains a competitive market” with premiums up 7% to £1.57bn. The COR showed a 0.4% improvement at 98.5%.
Emerging markets, including Latin America, India, the Baltics and Saudi Arabia, delivered an 18% increase in premiums of £519m and a 4.7% COR improvement at 98.6%.
Mr Haste also revealed he will step down at the end of the years after eight years leading RSA. He said: “We have turned around the performance of the group. The business is in good shape, with exciting prospects, firmly focused on growing our international and emerging markets regions and developing our strong UK franchise.”
He will be replaced by Simon Lee, currently chief executive of international, who will see his salary increase to £800,000.
Liverpool stockbroker Panmure Gordon changed its stance on RSA’s shares from hold to buy after today’s results.
Analyst Barrie Cornes said: “RSA has reported record H1 underwriting and operating results that were well above expectations in continued tough trading conditions.
“The news of the day, however, will be that the well regarded Andy Haste is to step down and is being replaced by head of international, Simon Lee.
“We view Simon’s appointment positively, given that he has a proven track record in the business and is a known quantity.”
