Profits at RSA rose nearly 80 per cent in the first half as the insurer said a combination of lower weather-related claims and falling debt repayments helped to boost its performance and allowed it to raise its dividend by nearly a third.
Pre-tax profits were up 78 per cent to £263 million in the six months to the end of June with a record combined ratio for the period of 93.2 per cent. The combined ratio shows the mix of payouts and costs against premium income and represents a profit when it is below 100 per cent. RSA said that its latest figure was an all-time low.
Group net written premiums were up 11 per cent at £3.45 billion.
Underwriting profits increased by 28 per cent to £222 million as the group’s loss ratio improved by 0.3 percentage points to 54.9 per cent, helped by what RSA said was “relatively benign” weather.
Debt costs further helped as the insurer’s deleveraging meant that interest payments fell from £54 million in the same period last year to £30 million. RSA said that its restructuring phase had come to an end with the disposal of legacy liabilities and the completion of the issue of new capital.
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On the back of the improved performance, RSA said that it would lift its interim dividend 32 per cent to 6.6p per share, almost double its level two years ago, with the group targeting a payout ratio of between 40 per cent and 50 per cent of earnings.
“RSA did well in the first half. We delivered outperformance, showing record underwriting results, attractive earnings and dividend growth with strong return on capital,” Stephen Hester, chief executive, said.
He said that, despite the strong performance, there was “much more that can be done to improve”.
The insurance company aims to automate more of its services, which it said had cut the time for routine processing by two thirds in its More Than pet and motor divisions. The company said that its initial findings suggested between 30 per cent and 40 per cent of all its business processes could be fully automated within three years.