RSA Insurance slashes 2013 interim dividend by 33%

DividendMax Ltd.

RSA Insurance slashes 2013 interim dividend by 33%


Strong operational delivery as a result of management actions

  • Encouraging progress in UK Commercial and Italy
  • Strong underlying performances in Canada and Scandinavia despite adverse weather and large losses
  • Operating leverage continues in Emerging Markets
  • Net written premiums up 7% on constant exchange rate basis to £4.7bn
  • Underwriting result up 26% at £188m (H1 2012 restated: £149m)
  • Post tax earnings up 24% to £190m (H1 2012 restated: £153m)
  • Annualised ROE 10.0% (H1 2012 restated: 8.0%)
  • Interim dividend of 2.28p per share (2012: 3.41p)

Balance Sheet remains strong on all measures

  • IGD surplus of £0.9bn; covering capital requirement 1.7 times
  • Economic capital surplus of £1.3bn on a 1 in 200 year calibration covering the capital requirement 1.6 times
  • S&P A+ (negative outlook) rating reaffirmed in June
  • Net asset value per share excluding pension deficit of 103p (H1 2012: 104p)

On track to meet guidance in 2013

  • Continued growth in premiums as business expands in Emerging Markets, Canada and Global Specialty Lines
  • Better than 95% combined ratio expected despite material adverse weather in Canada
  • Investment income of around £470m for full year 2013
  • Return on equity of between 10% and 12% expected in 2013
  • Confident in prospects for further improvements to ROE and COR in medium term

Simon Lee, Group Chief Executive of RSA, commented:

These are a good set of results demonstrating continued progress and the benefits of our diversified business model. We've achieved growth of 7% in premiums to £4.7bn. Despite the £48m impact of extreme weather in Alberta we have delivered a COR of 94.2% and remain on track to meet our full year expectations of a COR of better than 95% and ROE of 10-12%.

We are continuing to deliver strong organic growth in Emerging Markets and Canada. The acquisitions we executed in 2012 are delivering good results. Scandinavian performance remains strong and we are making good progress in the turnaround of performance in UK and Western Europe. The reduction in earnings from lower interest rates is beginning to slow down. The outlook for earnings is positive.

Net assets have contracted at 30 June 2013 due to the increase in interest rates at the end of June. All our capital measures remain strong and we are confident in our ability to deliver balance sheet growth in the medium term.

We are well placed to deliver improved shareholder value through growth in earnings, an attractive dividend and improving return on equity.

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