RSA hikes dividend as profits rise 78 per cent in first half

Caitlin Morrison
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RSA has increased its interim divi by 32 per cent

RSA has hiked its dividend after reporting a jump in profits during the first half of the year.

The figures

Pre-tax profit in the six months to 30 June was up 78 per cent to £263m from £148m this time last year.

Net written premiums rose to £3.45bn from £3.25bn, while underwriting profit increased to £222m from £174m.

The group improved the combined operating ratio to 93.2 per cent from 94.7 per cent.

The interim divi was hiked 32 per cent to 6.6p from 5p.

Shares in the group, which recently picked Luxembourg for its next EU headquarters, dropped 2.4 per cent to 643.28p at the open.

Why it's interesting

The company benefited from its operations over different countries, as it felt the impact of the Ogden discount rate cut in the UK. The UK underwriting result of £56m, excluding Ogden, would otherwise have been £17m.

Meanwhile, RSA's Ireland business returned to underwriting profit in the first half, putting £2m on the balance sheet, along with a combined ration of 98.8 per cent. Financial irregularities in the Irish business were uncovered in 2013 and the ensuing fallout led to a total reshuffle of management in the group with Stephen Hester brought in to lead a turnaround. In Ireland the group said it continues to target a return to operating profit for the full year 2017, "although the market remains challenging, in particular for claims inflation".

What RSA said

"RSA did well in the first half. We delivered outperformance, showing record underwriting results, attractive earnings and dividend growth with strong return on capital. Pleasingly, customers are also growing business volumes with us," said chief executive Hester.

"Across the group the focus is on making progress towards our best-in-class ambitions. And while RSA is now measuring against higher performance standards, there is much more that can be done to improve."

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