R&SA will cut premium written by £500m in the UK, reducing its personal lines by a quarter. The cut will mainly affect intermediated personal lines - as predicted by Insurance Times in July.
R&SA will consider the cuts on a deal by deal basis. Experts said that the cuts will mainly affect affinity deals with banks and supermarkets. High street brokers will also be affected.
R&SA made the announcement as it revealed its third quarter results. These showed that it has written £1.3bn of commercial lines premium and just under that figure for personal lines.
"The UK business will focus on commercial lines, MORE TH>N and selected intermediated personal lines. We are targeting cost reductions of £95m and claims and underwriting improvements of £105m by the end of 2004," said R&SA. This means 900 job losses in general insurance and a review of premises.
R&SA said: "UK commercial lines business is performing strongly - it significantly exceeds the 10% net real return on capital target already.
"We will continue to actively participate in the corporate, small business and specialist business areas. Capital will not restrict our ability to grow this business where we can write good quality business at the right price.
"Over the next two years we intend to grow MORE TH>N organically by 20% while reducing the cost ratio.The cost ratio reduction will occur as a result of the substantial economies of scale in administration and marketing that will be available as the customer base grows.
"We believe that this business will achieve a 10% net real return on capital by the end of 2004.
"Non-core and unprofitable personal lines will be exited and capital restricted. In particular, we will withdraw from or not renew unprofitable deals with corporate partners and brokers. Parts of our corporate partnership and broker business are sustainable and profitable and will be maintained."
