RSA’s early rate hike boosts net written premiums in H1

Early action on rates allowed RSA to increase the number of UK commercial lines premiums written while its peers’ top lines were falling, according to an equity analyst.

Net written premiums for RSA’s UK general insurance business increased 9% to £1.46bn in the first half of 2010 from £1.34bn in the same period last year. Premiums written in personal lines increased 10% to £596m, while commercial lines premiums were up 9% to £865m.

“RSA raised rates and cut their top line earlier than most, and in the results UK commercial seemed to be turning a corner,” said European insurance equity analyst James Shuck of investment bank Jefferies. “RSA is in a position now where they are growing affinity schemes and various other commercial lines segments from a low base.”

The commercial lines premium growth was helped by a 10% increase in risk solutions and 15% in marine. The firm also reported a return to growth in commercial motor, where premium income increased 23%.

UK chief executive Adrian Brown said that he expected one of the drivers of commercial lines growth would be small to medium-sized enterprise (SME) business.

“We are very underweight in SME business,” he said. “We have invested quite heavily in the business in the past year and we are now ready to take off again in that market.”

Despite the growth in top line, RSA UK’s underwriting profitability took a hit in the first half of 2010. The UK combined operating ratio worsened 1.5 points to 98.9% and the underwriting result fell to £2m from £33m.

The company attributed this to bad weather and large losses – including an £8m loss in the insurer’s ProFin account – which together cost the firm £42m.