UK subsidiary's rating now A (Excellent)
A.M. Best has upgraded the financial strength ratings to A (Excellent) from A- of RSA Insurance Group's UK operating subsidiaries.
RSA’s rating has been upgraded due to sustained improvement in the group’s consolidated risk-adjusted capitalisation, A.M. Best said. "This improvement has been supported by RSA’s excellent financial results in 2008, including a 25% increase in shareholders’ funds deriving from solid retained earnings, a rise in the group’s pension scheme surplus and foreign exchange gains."
A.M. Best said it believed that RSA’s strong financial performance at year-end 2008 will be maintained in 2009. "Year-end 2008 results were supported by solid investment performance, which outperformed A.M. Best’s expectations given the impact of weak economic conditions on the financial markets. Solid investment income from the group’s conservative investment portfolio, combined with gains from its various hedging strategies and asset sales, more than offset investment losses incurred during the year.
"Year-end 2008 results were also supported by excellent underwriting performance, with the group benefitting from further expense savings through improved operational efficiencies and lower weather-related losses, which impacted 2007 technical performance.
"RSA also benefits from its excellent business profile, which supports its distinct competitive advantage within its segment of the market. The UK continues to be RSA’s core market (representing 42% of consolidated net premium income in 2008), where it maintains a strong position within the commercial and personal lines segments of the market. Modest growth was achieved in this region in 2008, supported by some rate increases and solid retention rates. However, the sustained competitive environment continues to limit development in the UK.
"RSA also maintains a strong position in certain international markets (particularly in Scandinavia and Canada) and continues to develop its presence within the emerging markets. An increase in consolidated net premium income of 11% in 2008 to GBP 6,462 million (2007: GBP 5,837 million) largely derived from growth in RSA’s non-UK business. In 2009, A.M. Best anticipates a modest rise in net premium volume, reflecting some improvement in rates across RSA’s core market."
