Irish operations of insurer RSA sees 7% drop in revenue

By Geoff Percival

The Irish operations of British insurer, RSA, saw a return to underwriting profit — with £9.5m (€10.7m) generated — last year, but also significant drops in revenue and premiums.

RSA — which, on a group-wide level, beat analyst expectations on its 2017 profits — said net written premiums, a strong indicator of revenue, in Ireland, fell by 7%, to £303m, and customer premiums were down by the same amount.

“We expect underlying premium trends to continue into 2018 and weather and large losses to return towards long-term levels. In Ireland, we aim to improve profit levels, through underwriting and cost actions,” the company said.

The insurer’s UK and international division — which includes Ireland — generated operating profits of £67m last year.

RSA, the subject of an accounting scandal here in 2013, when it was found to have not set aside enough reserves to cover large claims, had already targeted a return to profit in its Irish arm in 2017.

In 2016, the Irish division suffered a widening underwriting loss of €58m and a jump from £26m to £42m in operating losses, after higher-than-expected claims levels. However, the business posted a profit of €2.23m for the first half of last year.

RSA’s total group, 2017 operating profit rose 1% to an above-forecast £663m, boosted by strong performances in its Canadian and Scandinavian businesses, in particular. Analysts had expected operating profit of £639m.

The company said it would pay a total dividend of 19.6p per share, up 23%. Even higher payouts for RSA shareholders are likely this year, said chief executive, Stephen Hester.

Analysts had been looking for a special dividend or share buyback from the insurer, following improving results, under the stewardship of Mr Hester, a former boss of RBS.

“At the end of 2018, we should have scope to increase dividends, not just by the amount that our profits increase, but by some further amount,” Mr Hester said.

"The company has been a subject of takeover speculation, after rival, Zurich Insurance, walked away from a bid in 2015, though some market players say its higher share price makes RSA a less attractive target now.

“We don’t need a deal. If someone were to approach us, we’d do the right thing for shareholders,” Mr Hester said.

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