MORETHAN insurance owner RSA yesterday admitted sales growth in its core UK market is stagnating in the face of tough competition and hefty cuts to car insurance premiums.
Total income from British operations hit £726m in the first three months of 2013, up just £1m on the same quarter last year.
The news will not make it any easier for RSA to placate shareholders ahead of its forthcoming AGM, where investors will have their say on chief executive Simon Lee’s announcement that he would slash the company’s famously high dividend by a third.
RSA was slated by investors for the decision back in February but yesterday the company promised to engage with investors and brief them on the group’s growth potential, while also flagging up the possibility of more bolt-on acquisitions.
The company also insisted it would continue to focus on more profitable businesses, even at the expense of volume: “Ten years ago the group operated in around 50 countries. Since then, the group’s focus has narrowed and RSA now operates a well diversified portfolio in 31 countries,” it said in a statement.
However, it is unlikely to see much improvement in the UK personal motor insurance market due to what it called “aggressive rate reduction”. The entire market is entering a difficult period, with premiums falling for the first time in years and the uncertainty creating by a forthcoming competition commission review into how the industry operates.
Despite the weak UK performance, total group written premiums edged up five per cent to £2.3bn thanks to strong performances at its Canadian and Emerging Markets divisions, where organic growth was boosted by new earnings from acquisitions.
Premiums in Scandinavia, the company’s other major market, remained flat at £694m on a constant foreign exchange basis.
RSA can also find solace in increased income from its household and pet insurance businesses.