2017 Interim Results

RSA Group


RSA announces strong first half results

  • RSA announces strong first half results.
  • Underlying earnings per share up 31%; Interim dividend up 32%.
  • Return on Tangible Equity1 16.6%.

Stephen Hester, RSA Group Chief Executive, commented:

"RSA did well in the first half. We delivered outperformance, showing record underwriting results, attractive earnings and dividend growth with strong return on capital. Pleasingly, customers are also growing business volumes with us.
Across the Group the focus is on making progress towards our best-in-class ambitions. And while RSA is now measuring against higher performance standards, there is much more that can be done to improve."

Trading results

  • Group operating profit £360m up 15% (H1 2016: £312m): Scandinavia £202m; Canada £71m; UK & International £151m2.
  • Group underwriting profit of £222m, up 28% (H1 2016: £174m).
         —  Record Group combined ratio of 93.2% (H1 2016: 94.7%). Scandinavia 81.9%; Canada 94.8%; and UK & International 95.4%2.
         —  Group attritional loss ratio of 54.9%, 0.3pts better than last year3; weather and large losses 0.2pts worse.
         —  Group prior year underwriting profit of £79m (H1 2016: £55m).
  • Group premiums of £3.4bn up 11% at reported fx, and up 3% at constant fx. Volumes accounted for 1% and rate increases 2%.
  • Investment income of £171m (H1 2016: £187m) down 9% versus the same period last year reflecting the impact of disposals and ongoing reinvestment at lower yields.
  • Below the operating result there were lower interest costs following our debt restructuring, with other non-operating items largely as flagged.
  • Pre-tax profit of £263m, up 78% (H1 2016: £148m).
  • Underlying earnings per share (EPS) 23.3p up 31% (H1 2016: 17.8p). Stated EPS up 133% to 18.4p.
  • Interim dividend of 6.6p/ordinary share declared, up 32% (H1 2016: 5.0p).
Play video
Watch RSA Group chief executive, Stephen Hester, talk through the highlights of our 2017 interim results

Capital and balance sheet

  • Solvency II coverage ratio of 163% after dividend accrual (31 December 2016: 158%), slightly above 130-160% target range.
  • Reserve margin returned to 5.0% target (31 December 2016: 5.5%) after release for Ogden rate change.
  • Tangible equity £2.8bn (31 December 2016: £2.9bn), 273p per share.
  • Underlying return on opening tangible equity of 16.6% annualised (H1 2016: 12.8%).

Strategic update

  • Restructuring now complete. 2017 actions comprised the disposal of UK legacy liabilities (announced in February); the issuance of c.£300m of restricted tier 1 notes in Scandinavia and retirement of c.£600m of existing high coupon debt. These actions reduced risk, improved capital resilience, and lowered interest costs.
  • The Group’s entire focus is now on the drive for outperformance. In that context, our many performance improvement initiatives continue to deliver progress, targeted at customer service, underwriting capabilities, and costs.
  • The improved premium trends we report for the first half reflect the service and capability enhancements we have been implementing. Pleasingly they are reflected in every region.
  • Underwriting capabilities continue to be refined across the Group. These include more sophisticated and agile pricing models, underwriter training and heightened discipline, and technology driven insights. Progress on loss ratios can be volatile but is on track overall with a couple of business line exceptions.
  • Group written controllable costs for H1 2017 were down 6% year-on-year at constant exchange to £723m (comprising 8% cost reductions, offset by 2% inflation). Group headcount down 8% versus H1 2016. Overall we remain on track to deliver >£400m gross annualised savings by 2018 (c.£330m achieved to date).


Underlying measure, refer to pages 21-23 of the full 2017 Interim Results announcement (PDF) for further information

2 Excluding Ogden impact

3 At constant exchange, ex disposals

Alternative performance measures: The Group uses alternative performance measures, including certain underlying measures, to help explain business performance and financial position. Where not defined in the body of this announcement, further information is set out in the appendix on pages 21-23 of the full 2017 Interim Results announcement (PDF).

Media enquires

Investor and analyst presentation

An analyst presentation, followed by a question and answer session, took place at 9:00BST. Watch a recording of the presentation, filmed live on 2 August 2017.

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.

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