The U.K.’s Royal & Sun Alliance continues on the road to recovery, posting a £1 million ($1.92 million) net pretax profit and an operating result of £456 million ($876 million), compared to £140 million ($269 million) in 2003.
The group was heavily impacted by accelerating reserve requirements in the U.S., which resulted in a sharp reduction in its U.S. operations. In a separate bulletin it announced that William Shea has been named Chairman of its U.S. Board of Directors and Michael Crall will serve as an outside Director.
The earnings announcement also noted the following highlights:
“Significant improvement in Group operating result:”
— Ongoing business combined operating ratio (COR) of 94 percent, compared to 96.8 percent in 12003.
— Group COR of 103.4 percent (2003: 108 percent)
— Group operating profit of £188 million ($361 million)
“Strong performance from ongoing operations:”
— UK business COR of 92.5 percent (2003: 94.8 percent) – excellent commercial and significantly improved personal results
— Strong performance in Scandinavia with a COR of 95.4 percent (2003: 99.3 percent)
— International continues to produce solid results with a COR of 95.8 percent (2003: 98.3 percent) “including a significant turnaround in Canada with a COR of 96.6 percent (2003: 102.9 percent)
“Delivered on strategic objectives:”
— Strengthened capital position with surpluses against all key measures
— Significant progress in stabilizing US business – focus on structural change including proposed sale of non standard auto
— Two significant appointments to the US Board
— Operational improvement program has now achieved £190 million ($365 million) of annualized savings
Group CEO Andy Haste commented: “2004 has been a year of substantial progress for the Group. We’ve driven strong operational performance and delivered against the strategic commitments we set out for the Group eighteen months ago. Our strategy for the future is clear – to run general insurance businesses where we have strong market positions and where we can deliver sustainable profitable performance.”
Concerning the new Board members of Royal & SunAlliance USA, the bulletin noted that Shea, 56, “brings with him more than 30 years financial services experience. From 2001 until 2004, he was CEO of US insurer, Conseco, where he successfully restructured the company and brought it back into profitability. Previously he was Vice Chairman and CFO at Bank Boston Inc. and was also a Firm Council Member and Senior Partner of Coopers & Lybrand, now PricewaterhouseCoopers.”
Crall, 61, was the first CEO of Equitas (1995-2003), “successfully creating and leading the £ 20 billion [$38.5 billion] company formed to reinsure and manage the pre-1993 liabilities of Lloyds of London,” said the bulletin. He remains an outside Director of Equitas and in 2003 he was also appointed outside Director of Catlin, the property and casualty insurer and reinsurer. Previously, he was President and Chief Executive of Argonaut Insurance Company, the US casualty insurance specialist. He began his career with Insurance Company of North America, holding several executive posts in Europe and the US.”
John Tighe, President and CEO, Royal & SunAlliance USA, commented: “These appointments bring us a great depth of senior US insurance expertise. They will be a great asset as we continue to restructure our US business.”
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