Reserve strengthening includes £22m for UK commercial motor

RSA described its 2010 underwriting performance in the UK as “disappointing” after posting a £95m loss (2009: £75m profit).

The insurer’s UK combined operating ratio worsened at 102.2% (2009: 98%) after £139m more weather losses than normal, driven by £110m of additional losses from the November and December cold snap.

RSA also called 2010 a “challenging year” for motor. Following a “deep dive review” into bodily injury it has strengthened prior year reserves by £25m, of which £22m relates to commercial motor.

Of the £110m of adverse weather in November and December, around £72m related to household losses, where RSA claims it has a 6% market share.

Further losses included £26m in commercial property and £12m across motor and other classes.

Overall UK premiums increased by 11% to £2.9bn.


In personal, premiums rose 13% to £1.24bn driven by growth in personal broker due to rating action and increased shares on targeted broker panels.

Personal broker household NWP was up by 38% and Motor up by 45%.

More Than household grew by 10% predominantly due to rating action and pet again grew strongly, with premiums up by 25% supported by the Tesco Pet deal which is expected to deliver £100m of premiums in 2011.


In commercial lines, premiums grew by 10% to £1.68bn with strong growth in specialty lines, with risk solutions up by 19% in Europe and 12% in the UK.

RSA growth of 19% in commercial motor is “flattered” by the phasing of a large three year contract and underlying growth is closer to 12%.

On commercial rates, RSA said it continues to take action, including 10% increases in motor, 5% in Liability and 4% in property. In personal, RSA added19% on motor renewals and 5% in household.


The UK expense ratio excluding commissions was 15% compared with 17% in 2009.

“We completed the expense savings programme announced in February 2009 in the first quarter of 2010 and achieved both the target headcount reduction of 1,200 and the £70m of annualised savings,” RSA said.

It added that the total cost of the programme was £80m as expected with the final £5m incurred in 2010. “We remain on target to deliver an expense ratio of around 14% by the end of 2012,” it added.

In 2011, RSA said it expects the UK to deliver targeted growth and, assuming a return to a more normal level of weather losses, a much improved underwriting result.