Rate rises and expansion in broker personal lines and affinity help lift premium growth

RSA’s net written premium has grown 7% in the first quarter of 2010, despite shrinking exposures and a lingering recession, says RSA UK chief executive Adrian Brown.

He said the return to growth for the UK, which posted net written premium of £697m, was the result of targeted rate rises and expansion in areas such as broker personal lines and affinity.

“We still expect to see exposure dropping this year, probably about one quarter of what it dropped last year, and we expect that to bottom out towards the back end of this year.

“But because of insurance renewals, there’s a six-month lag between the economy recovering and seeing that in your insurance premiums. Right now, we’re achieving that growth with there still being an underlying exposure reduction.”

In an exclusive interview with Insurance Times, Brown also revealed that RSA had shrunk its capacity in the construction market by one-fifth.

He said: “The biggest area of capacity withdrawal has been construction – it’s tied in with the economy. We’ve had a good hard look at that book and have been reshaping it since last year.”

Asked about the growth, Brown said: “It’s not because we haven’t been pushing rate through – because we have been and we still are. I do get increasingly that people believe RSA is open for trading, that we are more flexible and willing to listen.”

In personal lines, premiums grew 6% to £280m, with motor up 9% and household up 4%. Pet premiums grew 11%; the company has recently announced an affinity deal to provide Tesco’s pet insurance from the end of this year.

Commercial premiums were up 7% to £417m. Liability was up 6% and motor up 19%.

Personal motor rates increased by an average of 9%, while household rates were up 3%. In commercial lines, liability rates were up 6%, property up 5% and motor up 4%.

Group-wide, RSA’s net written premium was up 5% year on year to £1.9bn. The insurer predicted a combined operating ratio of around 95% in 2010.

Brown added that RSA was on course to reduce its expense ratio to 14% by 2012. He said advances in electronic trading in SME would help this, as well as the job cuts made last year. “The best way to reduce your expense ratio is to grow profitably.”

Click here to read the full interview with Adrian Brown.