Commercial MD also promises an end to restructuring shocks
RSA’s UK business will perform better in the second half of 2014 and will be free from further big changes to its portfolio, according to commercial managing director Jon Hancock.
RSA’s UK division reported an underwriting loss of £24m and a combined operating ratio (COR) of 104.5% for the first half of 2014.
The main culprit was RSA’s UK commercial book, where the COR jumped 13.1 percentage points to 109.7%.
Speaking to Insurance Times about the results, Hancock said: “Let’s be honest – that’s not where we want to be.”
But he pointed out that the loss had largely been driven by prior-year one-off costs hitting the commercial business, which included £20m of professional indemnity reserve strengthening, and a further £10m reserve hike for industrial deafness claims.
RSA’s UK commercial business made an underwriting loss of £43m but its current year result, which excludes the impact of the prior-year costs, was a profit of £3m. Also, the division’s underlying loss ratio, which excludes catastrophes and single large losses, improved by 1.7 points to 53.6% (55.3%).
Hancock said: “The absolute positive for us is that the current year in both commercial and personal lines shows a profit despite the heavy weather impact on both books of business.
“The majority of our portfolios are showing continued improvement in underlying loss ratios. That is from the pricing and underwriting action we are taking. That is what gives us confidence in the quality of the core book and that is why we expect to see underwriting profits improve in the second half of the year.”
RSA has made big changes to its UK portfolio in recent months, most notably making deep cuts to its personal motor business and exiting 800 personal motor broker relationships.
But Hancock predicted calmer waters ahead for the UK business. He said: “We have got no big shocks planned for our portfolios for the rest of the year.
“We think we have a good core book, and this is about focusing on continuing to improve those underlying loss ratios and managing the book hard to get back to the right levels of profit.”