Q3 2015 interim management statement

RSA Group


  • Nine month results at RSA show strong positive momentum, with Q3 profit trends well above 2014 and improving again on those reported for the first half.
  • YTD underlying premium income (NWP) is up 1% vs prior year1. Cost and attritional loss ratios continue to get better and the balance of volatile underwriting items has been favourable versus plan.
  • Our restructuring actions are paving the way to further improvement in sustainable performance levels.
  • Download full Q3 2015 Interim Management Statement (PDF, 160Kb)

Stephen Hester, RSA Group Chief Executive, commented:

"We are very pleased with progress to date in RSA's turnaround. If we can keep the improvements coming, the future is bright for RSA as a high quality, high performing leader in its markets.

“Our Plans are based on three pillars of work, each going well. The strategic refocus is nearing completion with the sale of our Latin America businesses announced in September, the last major element. Our balance sheet and capital work is also approaching satisfactory outcomes. And our complete operational overhaul of the business is showing good results and gathering still further momentum.

“Zurich's unsolicited approach to RSA was a distraction in Q3. It is pleasing that our business continued to perform well despite that. A tribute to our people and franchise.

“Insurance markets remain challenging and financial markets volatile. Within those constraints, RSA is making strong progress on the path to high quality and sustained business outperformance."

Strategic update

  • Fundamental improvements continue to be made towards our goal of a high performing RSA, building further confidence in achieving our medium term targets.
  • Announced £403m sale of Latin America operations, bringing total agreed disposal proceeds to £1.2bn to date.
  • Completed disposal of UK Engineering Inspection business and minority holding in India. Remain on track to substantially complete RSA’s strategic refocus by 2015 year end results.
  • Target satisfactory outcome to Solvency II internal model application by year end and to triennial review discussions with the UK pension trustees by the time of full year results.
  • Costs continue to fall as expected, other operational improvement actions showing good results.

Trading update

Market conditions

  • Insurance market trends remained unchanged, with price competition continuing to drive sharp price/volume trade-offs, though in line with our expectations overall.
  • Sterling remains stronger against all of our major currency exposures than a year ago, impacting results, although with some weakening against Scandinavian currencies and the Euro during Q3.
  • Interest rates trended lower across our major markets in Q3 with 5 year government bond yields in Sweden and the UK down c.30 basis points each. Yields in Denmark and Canada were stable.


  • Core Group underlying net written premiums of £4.4bn, up 1%1. Trends in line with expectations overall.
  • Net written premiums for Q3 year-to-date1 were up 4% in Scandinavia, up 2% in the UK, down 4% in Canada and down 5% in Ireland.
  • Further detail available on pages 5-6.


  • Trading results for the third quarter were strong and ahead of our expectations. In the discrete third quarter, the underwriting performance in the UK, Canada and Scandinavia was ahead of the same period last year and ahead of our plan.
  • The attritional loss ratio for Q3 2015 showed good year-on-year improvement driven by the UK, Ireland and Canada.
  • As at the end of Q3 total Group (incl. non-core) weather event costs for the year-to-date were £92m which represents 1.7%2 of net earned premiums (Q3 2014: 3.8%). The Core Group weather ratio was 1.5% (Q3 2014: 4.3%).
  • Large losses for the total Group (incl. non-core) were £409m for the year-to-date representing 7.7% of net earned premiums (Q3 2014: 7.2%), slightly worse than plan. During the quarter we booked an estimated net loss of £16m from the Chile earthquake in September. The Core Group large loss ratio was 8.3% (Q3 2014: 7.8%).
  • At the end of the third quarter, we saw positive prior year emergence overall and particularly in Canada. We remain on track to deliver full year 2015 prior year profits in line with our guidance of c.0-1% of premiums.
  • Expenses have continued to fall and we are making good progress against the increased targets set out at the beginning of this year.
  • We target continuing improvements to underwriting profitability in the remainder of the year, though results overall will be subject to weather/large loss volatility and prior year reserve movements.
  • Investment performance is on track to deliver around £390m of income in 2015.
  • YTD net attributable profits are ahead of our plans. Q3 profit also included £21m disposal gains from the sale of our Indian associate, bringing total disposal gains for the year-to-date to £153m.


  • Tangible equity up £115m to £3.0bn (30 June 2015: £2.9bn). Tangible net asset value per share 294p.
  • Economic capital surplus at 30 September 2015 of c.£1.0bn with coverage of 1.3 times.
  • Further detail available on pages 7.


  1. at constant exchange rates, before the impact of Group Re.
  2. 2.2% if the cost of the new Group aggregate reinsurance cover, purchased in 2015 and designed to limit weather and large loss volatility, had been treated as a weather event cost.

Conference call for analysts

Analysts and investors are invited to join a conference call starting at 09:00 GMT today (5 November 2015). To join the call (RSA Q3 2015 IMS) dial:

  • Toll-free (UK only): 0808 237 0062; or
  • International: +44 (0) 20 3426 2845.

A recording of the call will be available on the RSA website around midday.

Analysts & investors contacts

Press contacts

Important disclaimer

This press release and the associated conference call may contain ‘forward-looking statements’ with respect to certain of the Group’s plans and its current goals and expectations relating to its future financial condition, performance, results, strategic initiatives and objectives. Generally, words such as “may”, “could”, “will”, “expect”, “intend”, “estimate”, “anticipate”, “aim”, “outlook”, “believe”, “plan”, “seek”, “continue” or similar expressions identify forward-looking statements. These forward-looking statements are not guarantees of future performance. By their nature, all forward-looking statements are inherently predictive and speculative and involve risk and uncertainty because they relate to future events and circumstances which are beyond the Group’s control, including amongst other things, UK domestic and global economic business conditions, market-related risks such as fluctuations in interest rates and exchange rates, the policies and actions of regulatory authorities, the impact of competition, inflation, deflation, the timing impact and other uncertainties of future acquisitions or combinations within relevant industries, as well as the impact of tax and other legislation or regulations in the jurisdictions in which the Group and its affiliates operate. As a result, the Group’s actual future financial condition, performance and results may differ materially from the plans, goals and expectations set forth in the Group’s forward-looking statements. Forward-looking statements in this press release are current only as of the date on which such statements are made. The Group undertakes no obligation to update any forward-looking statements, save in respect of any requirement under applicable law or regulation. Nothing in this press release shall be construed as a profit forecast.