Full year profits for Royal & SunAlliance (R&SA) fell 38% as it exited key business lines during 2003.
Operating profit for 2003 was £140m, down from £226m in 2002, compared with a consensus forecast of £176m.
Net written premiums reached £6.63bn for 2003, compared with £8.63bn for the previous year.
Pretax profit before exceptionals and goodwill was £162m, up from a loss of £1.21bn for 2002. The combined ratio was 108%.
2003 saw R&SA’s £960m rights issue in September, as well as the sale of the company’s fund management business, the disposal of its Chilean life operation, the auction of parts of its US insurance capacity, and the flotation of its Australian life unit.
“The drag from the discontinued lines in run off will continue to impact our results for some time - not least as we work to resolve the expense overhang in the US, UK personal and Canadian commercial lines (businesses),” said the insurer.
During the course of the year, R&SA added £96m to its reserves from a central fund of £300m. Of that amount, £70m has been allocated to meet liabilities such as asbestos compensation in the US and £23m has been set aside for UK business.
The rights issue raised £800m for the company, of which £500m was used to reinforce the insurer’s reserves. £200m has been placed in a contingent liability account to meet any future claims against the company.
The insurer said it was on course to meet its target of £270m in annual cost savings, with economies of £144m and a one-off cost of £173m.
