R&SA Posts $482 Million H1 Profit Despite UK Flood Claims

August 8, 2007

The UK’s Royal & SunAlliance enjoyed a prosperous first half of 2007, despite the costly flood losses that hit the UK in June and July. After tax profits for the period were £237 million ($482 million) only slightly lower than the £238 million ($484 million) the Group posted in the first half of 2006.

Group CEO Andy Haste commented: “In challenging market conditions, we’ve had a good first half – we’re driving profitable growth in each of our regions and we’ve achieved a strong bottom line result. The results have been delivered against the backdrop of the UK floods in June, as well as adverse weather and increased large losses across the Group, and clearly demonstrate the benefit of management actions and the strong and diversified portfolio.”

He also said he remains positive for the rest of the year, even though the flood loss estimates are around £120 million ($244 million). “As it stands today, we expect to deliver a combined operating ratio for the full year of around 96 percent,” Haste continued. “With our strong portfolio and the actions we are taking, we are confident that in 2008 and beyond, we will continue to deliver the profitable performance that we have seen over the last few years.”

He also announced a 42 percent dividend increase to £2.48 ($4.88) from £1.75 ($3.56) in the first half of 2006.

Other highlights cited in the report were:
— Net written premiums of £2.992 billion ($6.09 billion) up 8 percent at constant exchange rates
— Combined operating ratio (COR) of 93.3 percent
— Operating result of £403 million ($820 million)

In addition R&SA reported that it had achieved a number of “strategic objectives” during the period, notably that it had “achieved annualized expense savings target of £130 million ($264.6 million] ahead of schedule.” The Group plans “a further £70 million [$142.5 million] of expense savings bringing the total to £200 million [$407 million] by mid 2008.” Those economies have, however, been accompanied by job cuts – 1600 so far, with another 500 jobs in the UK and around 200 outside of the country scheduled to take place by 2008.

R&SA also pointed out that it had completed the successful buyout the Codan minorities and delisted Codan, its Danish insurance operation, on July 31, 2007 (See IJ web May 25). In addition the Group signed an Eastern European joint venture, received a Chinese insurance license and successfully completed the disposal of its remaining U.S. business during the first half of 2007.

The full report, analysts’ and investors’ presentation may be obtained on the Group web site at: http://www.royalsunalliance.com.

Source Royal & Sun Alliance

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