Insurer plans large-scale redundancies as it strives to save £70m a year
RSA is to cut 1,200 jobs in the UK by the middle of 2010.
The insurer will make 14% of its 8,700-strong workforce redundant as part of a strategy to save £70m a year by the middle of 2010 and achieve an expense ratio of about 14% by the end of 2012.
RSA said that, by 2010, the group would have reduced its headcount by 43% in seven years.
Adrian Brown, UK chief executive of RSA, said: “We have already reduced our management population by about 15%. One of the reasons why RSA has continued to produce strong results is that we’ve taken action early on rate and expenses and this is a continuation of that action.”
The job cuts come despite RSA’s strong results for 2008. Net written premium rose 11% to £6.5bn last year, while pre-tax profit increased 13% to £759m. RSA’s combined operating ratio has improved to 94.5%, from 94.9% in 2007.
Personal lines premiums were up 2% to £1.1bn. Premiums in commercial lines were in line with last year at £1.6bn.
Brown said the insurer had only made slight changes to its investment portfolio. Corporate collapses had had little impact on its investment, he added.
“We have consistently invested in high-quality assets. About 90% of our assets are invested in bonds, cash that are rated double A or above.
With big corporate collapses like Lehman, for example, we were only exposed by about £10m to £12m.
“We’ve not had to make a big shift in our investment portfolio at all.”
Brown added that he had seen little evidence of the market hardening. “It’s too early to say whether the market has turned completely. You will sometimes see erratic behaviour but, overall, I am seeing some discipline back in the market.”