Royal & SunAlliance reported a 15% drop in its first quarter profits, hit by the disposals made during the past 12 months, particularly the floatation of its Australasian life business, Promina.
Chief executive Andy Haste described the results as good, and said the performance of the group’s ongoing businesses was encouraging.
Operating profit for the group was £148m for the three months ended 31 December 2004, compared with £175m for the corresponding period of 2003. This compares with a range of £125m - £150m predicted by analysts.
Net written premiums for general business fell from £1,945m in 2003 to £1,214m for 2004.
The group’s combined ratio for the quarter was 98.7%. For R&SA’s UK operations the combined ratio was 96.4%, which the company said reflected a strong commercial result and an improvement in the performance of its personal lines business.
The combined ratio for R&SA’s personal lines operations improved from 106.7% in 2003 to 99.9% for 2004, and for its commercial lines business it improved from 94.4% in 2003 to 91.3% for the first quarter of 2004.
R&SA said its shift in strategy in the UK for a move towards direct distribution could now be seen, with combined ratios of 86.6% for property, 99.1% for MORE TH>N, and 105.2% for motor, down from 112.0% a year earlier.
It said the improvement in the performance of its UK household business was driven by reductions in both the average cost of claims and a reduction in claims frequency.
Overall commercial premiums, excluding the effect of the Munich Re quota share, were 3% down on 2003 said the company. But it said it was seeing rates plateauing in certain lines of business, in line with expectations.
The disposal of R&SA’s UK healthcare and assistance business during 2003 and the cessation of renewals on the HBOS book of business from 1 January 2004 hit personal lines premium for the quarter, down 51% on the previous year.
Net of quota share, personal intermediated premiums fell by 56%, reflecting the significant restructuring of the motor book during 2003 and the HBOS exit. Net of quota share, MORE TH>N premiums grew by 3% over the year reflecting both a highly competitive market in the first quarter, and premium reductions. The performance of MORE TH>N motor, with premium growth of 7%, was good in this environment, said the company.
Haste, said: “The good result reflects the actions we have taken and we now have a cleaner portfolio of businesses from which to exploit selective opportunities for profitable growth.
“We continue to restructure and rebuild the business but more remains to be done. While the process will continue to be challenging, we now have the right team and the right strategy.
“We’re focussed on what we have to do to de-risk and improve the operational performance of the business.
