RSA’s Irish business improves ‘strongly’ in first half of 2018

Insurer RSA said its Irish business improved strongly in the first half of 2018, increasing profit despite the impact of Storm Emma and other adverse weather events.

RSA’s underwriting profit was £19 million (€21.4 million) in the first six months of the year, compared with £2 million in 2017, with a combined ratio of 87.3 per cent.

Net written premiums in Ireland fell 3 per cent at constant currencies to €171 million and Storm Emma cost the company's Irish business about €6.5 million, on top of the £47 million incurred in Britain.

On a group basis, RSA posted a 15 per cent drop in first-half operating profit to £304 million. Operating profit for the group was in line with a forecast £303 million, according to a company-supplied consensus forecast.

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General insurer RSA, best known in Britain for its More Than brand, also has major businesses in Canada, Ireland and Scandinavia. It offers motor, home and pet policies, as well as commercial insurance.

A particularly cold winter in Canada, a heavy Canadian windstorm in May and Britain's Storm Emma were among weather conditions to impact RSA's earnings, chief executive Stephen Hester told a media call.

The Canadian bad weather caused more motor accidents, Hester said

“Weather is a random walk, we have no reason to believe the second half will be worse than normal,” he said.

Rival Aviva also said on Thursday weather conditions hit its first-half results.

RSA’s net written premiums dropped 5 per cent to £3.2 billion in constant currency terms, below a forecast £3.4 billion, and underwriting profit fell 23 per cent to £171 million.

“The miss in underwriting profit is not ideal but it does not look to be anything that will have a longer term impact,” Paul De’Ath, analyst at Shore Capital, said in a note.

The company also said it has signed an insurance distribution, or bancassurance, deal with Canada’s Scotiabank.

Political uncertainty could weigh on RSA and other insurers' investment income due to the impact on foreign exchange and interest rates, Hester, a former boss of RBS, said.

"World trade wars, any geopolitical risks that come out of debates with Iran, or it could be a hard, or soft or no-Brexit deal, have the risk of moving markets significantly."

RSA said it would pay an interim dividend of 7.3 pence per share, in line with forecasts and up 11 per cent.

RSA’s shares fell 1.03 percent to 635 pence per share at 0702 GMT, compared with an 0.5 per cent fall in the FTSE 100 index. – Additional reporting: Reuters