RSA Insurance Group plc Q3 2016 Trading Update

RSA Group


RSA performed strongly in Q3 with underwriting profits, combined ratio and operating profits ahead of H1 run rate.

Stephen Hester, RSA Group Chief Executive, commented:

“We are very pleased with RSA's continuing progress towards our ‘Best in Class’ ambitions.
“Momentum in the business is excellent across the many improvements to customer service, underwriting effectiveness and cost efficiency we are driving through.
“Brexit provides us an attractive tailwind from overseas earnings translation, in the context of an otherwise challenging environment. “While Q4 can be a bumpy underwriting period, RSA is on track for strong operating earnings increases for 2016 overall.”

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Trading update

Market conditions

  • Insurance market conditions are broadly unchanged.
  • Financial markets were volatile in Q3. In the UK, Brexit impacts were seen through lower bond yields, narrower spreads and weaker Sterling. In October, however, the yield and spread movements partly reversed.
  • Sterling depreciated a further c.3% in the quarter against our major international currency blocks, bringing average year-to-date depreciation into the mid-teens. With over two thirds of RSA’s operating profit in non-Sterling currencies this benefits RSA’s reported results.


  • Core Group net written premiums YTD are up 6%, though slightly down on an underlying basis1. Premium levels are in line with our plan overall, though with some variability by region.
  • Group net written premiums YTD down 5% versus prior year reflecting the impact of disposals.


  • Profitability for Q3 YTD on underwriting, operating and after-tax measures is strong and ahead of our expectations.
  • 2016 YTD attritional loss ratios continue to show attractive year-on-year improvement across all of our core regions.
  • Q3 YTD weather event costs for the Core Group were £145m which represents 3.2% of net earned premiums (Q3 YTD 2015: 1.5%; planning assumption: c.3.0%). The overall Group weather ratio was 3.0% (Q3 YTD 2015: 1.7%).
  • Large losses for the Core Group were £411m for Q3 YTD representing 9.0% of net earned premiums (Q3 YTD 2015: 8.3%; planning assumption c.8.5%). The overall Group large loss ratio was 8.4% (Q3 YTD 2015: 7.7%).
  • Q3 YTD prior year profit emergence is better than plan, though likely to remain volatile on a quarterly basis.
  • Expense reductions remain on track.
  • Investment performance is in line with our most recent guidance for 2016 (of c.£350m of full year income and c.£60m of discount unwind).
  • Below operating profits, Q3 movements were broadly as expected. There was the previously flagged one-off charge of £39m relating to the July debt buyback, and there were planned charges reflecting the progress of our cost/restructuring activities.


  • Tangible equity at 30 September was £3,179m (30 June 2016: £3,324m, 31 December 2015: £2,838m) with net income, positive FX and mark-to-market movements, offset by negative pension fund movements (IAS 19 basis). Tangible net asset value per share was 312p.
  • Solvency II capital surplus at 30 September 20162 was c.£1.0bn with coverage well within the upper part of our target range at 151% (30 June 2016: 158%, 31 December 2015: 143%). Coverage strengthened in October.
  • The movement in Solvency II coverage was dominated by the impact of UK post-Brexit quantitative easing on the AA corporate bond spread which drives IAS 19 pension accounting. This was partly offset by positive movements from profits, FX and other mark-to-market values. The 30 September Solvency II position also includes the accrual of a ‘notional’ dividend for the third quarter3.
  • £200m subordinated debt retirement completed in July. We continue to evaluate further options to improve the quality of capital as well as exploring potential transactions involving our UK Legacy liabilities.

RSA global highlights Q3 2016

On Thursday, 3 November, we released our Q3 2016 trading update—a report on how RSA Insurance Group has performed financially over the last three months. Here are a few more highlights in Scandinavia, Canada and the UK.

  • Trygg Hansa continues to make a big splash with its focus on promoting water safety. In addition to their hugely successful 'Don't drink and dive' campaign which aimed to tackle the high number of alcohol-related swimming deaths in Sweden, they've also helped 28,500 children learn to swim by sponsoring summer swim schools.
  • Our colleagues in RSA Canada raised an incredible $151,218 (£92,309) for the Canadian Red Cross Alberta Fire Emergency appeal which offered support to the 70,000+ residents evacuated from their homes during the devastating wildfires. Within 24 hours of the fires breaking out, our customer care teams were speaking directly to affected customers to let them know what support was available and how to stay safe. Extra adjusters were also brought in to make sure our customers—personal and commercial—got the support they needed.
  • During Living Wage week (30 October - 5 November 2016), RSA UK was announced as an accredited Living Wage employer reflecting, as Helen Lloyd, RSA UK HR director says, "our recognition that our employees are our most important asset". 
  • Our telematics-based motor insurance product for young drivers, MORE TH>N SM>RT WHEELS, has captured over 5% of the UK telematics market in less than two years, with customers notching up over 100 million miles since its launch. Claim frequencies for SM>RT WHEELS customers are 30% below the market norm and 97% of the drivers we contacted about potentially dangerous driving habits we'd noticed said that they had changed their driving behaviour as a result.  
  • Finally, to mark the 350th anniversary of the Great Fire of London, RSA worked with the Guy Fox History Project to produce ‘History Rocks: The Great Fire of 1666’ - an illustrated children’s history book, 10,000 copies of which were distributed to primary schools around the country. 


1 Constant currency, excluding Group Re.

2 The Solvency II capital position at 30 September 2016 is estimated.

3 This ‘notional’ amount should not be considered in any way to be an indication of a final dividend, if any, for the 2016 financial year.

  • Download the complete RSA Q3 2016 Trading Update (PDF)

Conference call for analysts and investors

A conference call for analysts and investors was held at 08:30am on Thursday, 3 November 2016 to discuss the Q3 Trading Update. 


Analysts & investors


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.