RSA Insurance posts 15% half-year profits rise - but has 'much more' to do
More Than owner RSA Insurance has hailed the end of its overhaul as it posted a 15% leap in half-year profits, but said it still has "much to do" amid tough UK conditions.
The group said its "entire focus" was now set on the "drive for outperformance" after completing a recent restructuring.
RSA posted group operating profits of £360 million for the six months to June 30, up from £312 million a year earlier, while bottom-line profits leapt 78% higher to £263 million.
It offered investors a 32% hike in its interim dividend to 6.6p a share, but shares fell 3%.
The figures revealed UK underwriting results plunged to £17 million from £76 million the year before as it took a hit from the Government's proposed changes to the so-called Ogden rate.
The changes to the Discount Rate calculation are expected to increase payments given to victims of life-changing injuries through medical negligence, car crashes and other incidents.
Even with the impact of the Ogden rate change stripped out, its UK underwriting result still fell 26% to £56 million, although the group insisted this was in line with its expectations.
RSA cited "difficult trading" conditions in the UK due to a hit from weather and large losses, as well as inflationary pressure in home insurance.
Net written premiums rose 5% in the UK as a 12% surge in personal insurance - home, car and pet cover - was offset by a weaker performance in commercial, where premiums edged 1% higher.
Motor insurance net written premiums jumped 35% higher, thanks to further growth of telematics or "black box" insurance that monitors driving habits.
RSA has been selling businesses and cutting costs under the restructuring led by chief executive Stephen Hester, the former boss of Royal Bank of Scotland.
He said: "RSA is pleased to report another half-year of outperformance. But we are not relaxing. There is much more we aim to improve - for both customers and shareholders.
"Competitive markets and our own raised ambitions will demand no less."
Nicholas Hyett, equity analyst at Hargreaves Lansdown, said the group would struggle to drive returns in the personal insurance market.
He said: " The problem facing RSA is that for all its recent progress, it's still in personal insurance, and that's a tough market in which to deliver knockout performances."