RSA announces 1200 jobs cuts

RSA has announced it is to cut 1,200 jobs despite posting strong annual results for 2008. "We have announced a new £70m expense savings target for the UK to be delivered by mid 2010, primarily through a reduction in headcount of 1,200. There will be a one off cost in 2009 of £80m to deliver this, which will be treated as a reorganisation cost and will not be included in the operating result (as reported on the management basis). With these and other actions, we are targeting an expense ratio of around 14% by the end of 2012," said RSA.

RSA said pre-tax profits incresed 13% to £759m and announced a combined operating ratio of 94.5%. Net written premiums were up by 11% to £6.5bn.

Highlights

• Net written premiums of £6.5bn, up 11%
• Combined operating ratio 94.5% from 94.9%
• Operating result of £867m, up 7%
• Profit before tax of £759m, up 13%
• Shareholders’ funds of £3.8bn, up 25%
• IGD surplus up 13% to £1.7bn, representing coverage of 2.5x
• Underwriting result £384m up 38%
• Dividend for the year per ordinary share 7.71p up from 7.01p
• Combined operating ratio for 2009 expected to be around 95%

Commenting on its UK business, RSA said: "We are maintaining our strategy of targeting profitable growth, taking the right action on rate and selective capacity withdrawal. Total premiums are up 1% to £2.7bn. In Personal, premiums are up by 2% at £1.1bn, reflecting a good performance from MORE TH>N, with 2% premium growth, while, as expected, affinity volumes continue to be impacted by lower new car sales and mortgage originations. In commercial, premiums are in line with last year at £1.6bn, with strong growth in specialty lines offsetting the withdrawal of capacity in lines of business where we cannot achieve our target returns. We have continued to take action on rate, increasing personal motor rates by 6% and household by 5%, and achieving increases in commercial of 6% in liability, 7% in property and 8% in motor. Overall retention remains strong at around 80%."

Andy Haste, Group CEO of RSA, said: "In a year of challenging trading conditions and volatile investment markets, we have once again delivered strong results and have strengthened the group’s net asset and regulatory capital position. These results continue to demonstrate the positive impact of our tight operational and financial management and the benefit of the group’s strong and diversified portfolio.

“We expect to continue to face challenging conditions going forward. However, with our ongoing actions and the strength of our portfolio and balance sheet, we remain confident of continuing to deliver sustainable profitable performance and we are well positioned to take advantage of market opportunities. As it stands today, we expect to achieve a combined operating ratio for 2009 of around 95%. Given the strong performance in 2008, and our positive outlook for the Group, we have increased the final dividend by 10% to 4.98p (2007: 4.53p)."