Company hails ‘best underwriting result in over a decade’ as RSA UK profit jumps

RSA UK profit

RSA’s UK business made an operating profit of £259m in 2016, up 76% on the £147m it made in 2015.

The main driver of the RSA UK profit increase was a surge in underwriting profit to £123m (2015: £12m), which the company hailed as the UK’s “best underwriting result in over a decade”.

The UK combined operating ratio (COR) improved by 4.1 percentage points to 95.4% (2015: 99.5%). The personal lines COR remained almost flat at 95.7% (2015: 95.9%) while the commercial business returned to underwriting profit with a COR of 95.2% (2015: 102.3%).

RSA UK COR breakdown

 2016 (%)2015 (%)change (points)
Household 91.7 90.3 1.4
Personal motor 101 107.8 -6.8
Pet 99.4 96.7 2.7
Total UK personal 95.7 95.9 -0.2
Commercial property 88.2 101.3 -13.1
Commercial liability 103.7 101.5 2.2
Commercial motor 107.4 99.1 8.3
Marine and other 90.5 109.4 -18.9
Total UK commercial 95.2 102.3 -7.1
RSA UK total 95.4 99.5 -4.1

The improvement in overall underwriting performance was mainly driven by the commercial property and marine and other lines (see table). There was also a large improvement in personal motor underwriting performance, where the COR fell to 101% from 107.8%.

The better underwriting result came despite a sharp deterioration in commercial motor underwriting performance, where the COR jumped 8.3 points to a loss-making 107.4% (2015: 99.1%). The commercial liability underwriting performance also worsened, with a 2.2% increase in COR to 103.7% (101.5%).

The company said these increases were caused by “more elevated large loss levels” in motor and liability.

Total UK net written premiums fell 1% to £2.59bn (2015: £2.61bn) as a 6% decrease in personal lines offset a 3% growth in commercial lines.

RSA said that the overall reduction included “portfolio remediation” in brokered personal motor and delegated business.

The 6% drop in personal lines net written premium to £1.07bn (2015: £1.1bn) was mainly caused by the company’s decision to exit brokered motor.

Speaking to journalists about the results this morning, RSA UK chief executive Steve Lewis said the overall UK result was “a good down-payment on our journey to being best in class”.

He added: “It has been a real team, effort and a number of years in the making, and it is a result that for the first time in many years reflects our size and standing in the market.”