Royal & Sun Alliance reports robust first-quarter profits |
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Published
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Thu, 11 May 2006 18:45
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LONDON - Royal & Sun Alliance today reported a 30 percent increase in first-quarter operating profits and said that it expected to meet the target for this year. Britain's second-largest commercial insurer also said that it had managed to close the gap in its pension fund.
The combined operating ratio at RSA narrowed from 91.8 percent to 91.6 percent and the group said this would fall to 95 percent by the end of 2006. This ratio is a key indicator of underwriting profits and the more it is below 100 percent the better the profits are.
Operating profits at the group increased to £207 million, up from £160 million reported at the same time last year. This was comfortably more than market expectations of £193 million. The company added that cost-cutting measures would result in savings of £250 million a year and that the pensions' deficit had been lowered by 66 per cent from £370 million to £127 million.
"As we see it today, we remain confident of delivering a core group [defined as all operations outside the US] combined operating ratio of around 95 per cent in 2006. Our key objective is to deliver sustainable profitable performance and each of our core businesses have again delivered strong results," said RSA chief executive Andy Haste. "Our portfolio of businesses are well positioned in their target segments and provide us with exposure to markets at different stages in the cycle."
The US business also performed exceptionally well and turned a £14 million loss to a £4 million profit. This was possible due to cost cutting and reducing claims and expenses. The net new premiums written stood at £1.4 billion, which is similar to what was recorded last year. RSA shares increased 2 percent to 143.25 pence in the backdrop of this news.
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