RSA takes a disciplined approach to personal lines pricing, resulting in a return to underwriting profit
RSA has shrunk its UK personal lines book, but returned to a small underwriting profit.
All personal lines products saw premium reduced – most significantly in household, which dropped from £313m at H1 2018 to £273m for this half of the year – a 13% decline. In part this was due to the sale of Oak Home, attributing to four percentage points of the reduction.
Personal motor premiums fell from £113m to £93m at the half year point, while in pet premiums fell from £130m to £122m.
RSA said that it had remained disciplined on rate and that new business had been down as a result of this. However, it highlighted that retention had improved.
The action returned RSA to an underwriting profit in UK personal lines, with a combined operating ratio of 99.7% - a profit of £2m. The business had made an underwriting loss of £11m in H1 2018 with a COR of 101.9%.
Across UK commercial, where the insurer has been exiting swathes of London market and MGA business, RSA recorded a COR of 98.2%.
RSA had earned a COR of 93.2% in UK commercial for H1 2018, but excluding the effect of those loss making policies it is currently exiting, the COR would have been 94.6%.
In commercial lines RSA premiums fell from £723m to £660m, largely due to these exits.
The exiting of unprofitable business was said by RSA UK and International chief executive Scott Egan to be 85% complete when he spoke to Insurance Times about the results today.
The underwriting loss from these portfolios was £28m for the period. Net written premiums were £12m.
A further £30m of exited premiums are expected to be earned out in H2, with this reducing to £10m in 2020.
The total net premium targeted for exit was £250m.
Overall the UK made an underwriting profit of £14m for the first half of 2019, with a COR of 98.9%.
However, when the business being exited is excluded, the COR was 96.5% - which would be an improvement on the 2018 H1 COR of 97%.
UK written premium was £1.15bn for the first half of 2019, compared to £1.28bn in the first half of 2018. Once the exited lines are considered, this would bring UK written premiums down to £1.14bn for H1 2019. This equates to around a 10.2% drop in UK premium.
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