# RSA Insurance Group Plc reported an underwriting loss

- Link: https://www.directorstalkinterviews.com/rsa-insurance-group-plc-reported-an-underwriting-loss/412759192
- Published: 2018-09-28T07:50:50+01:00
- Author: Charlotte Edwards

**RSA Insurance Group Plc** (LON:RSA), today announced Q3 trading update.

> **Stephen Hester, RSA Group Chief Executive, commented:**
> “RSA’s international businesses performed well in Q3, making strong progress against
> our best-in-class ambitions. However, our UK and ‘London market’ business reported
> an underwriting loss which is disappointing. Actions to improve in the UK are 
> well underway and we are determined to restore satisfactory performance whilst
> continuing our progress internationally.”

**Trading update1**

**Market conditions**

· Insurance and financial market trends are largely unchanged versus H1 2018 in 
RSA’s territories.

**Premiums**

· Group Net Written Premiums year-to-date of £4.9 billion up c.1%2 net of changes
in reinsurance3 but down 2%2 at a headline level

· Regional premium trends comparable to H1. Growth in areas where underlying profitability
is positive, tempered by the impact of pricing and portfolio remediation actions
where required

· In Scandinavia, attractive growth continues in Swedish Personal Lines with policy
counts, retention and rate all contributing

· Positive trends continue in Canada with Johnson, Personal Broker and Commercial
premiums all up in a hardening market

· UK premiums remain lower than 2017 as pricing and re-underwriting action is taken.

**Profitability**

· Pre-tax profit for the year-to-date higher than 2017 but lower on an underlying
basis due primarily to elevated weather costs

· Preliminary underwriting result for Q3 discrete:

– The Group’s international businesses performed strongly in Q3 with combined ratios
of c.84% for Scandinavia, c.94.5% for Canada, c.88% for Ireland and c.81% for the
Middle East

– The UK and London market business made an underwriting loss of c.£70m (combined
ratio c.110%) with higher weather, large losses and attritional claims. The Marine
portfolio was the hardest hit

**· Year-to-date underwriting trends:**

– Weather losses have been higher than last year in all regions but particularly
in Canada and the UK; Group weather ratio c.4.6% (five year average: 3.2%; Q3 2017:
2.4%)

– Large losses in the UK are better than last year (despite Q3 spike) and a little
worse in Canada and Scandinavia; Group large loss ratio c.11% (five year average:
9.0%; Q3 2017: 11.3%)

– Attritional loss ratios year-to-date in all regions are broadly consistent with
the prior year5. Q3 deterioration in the UK reflects improvements in Household and
Commercial Property which were more than offset by deterioration in Motor and Marine

– Controllable expense ratio continues to reduce

– Prior year development in line with H1

· Retention ceiling now reached on Group aggregate reinsurance cover, providing 
protection for individual losses over £10m in Q4

· Investment income consistent with improved guidance issued in August 2018.

**Capital**

· The Group’s Solvency II coverage ratio at the end of Q3 is expected to be around
172% (31 December 2017: 163%).

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