RSA underwriting profit rises, shares rally

(Reuters) — RSA underwriting profit rose strongly for the year to date, but net written premiums were flat after the British insurer cut poorly performing parts of its business, it said on Thursday, sending its shares higher.

Best known in Britain for its “More Than” brand, RSA Insurance Group PLC also has major businesses in Canada, Ireland and Scandinavia.

The home, motor and commercial insurer warned last year about the poor performance of its London-based international commercial insurance business and pulled out of several lines, including international freight and construction.

Years of falling prices due to steep competition in commercial insurance have led many insurers to scale back.

“Things that we thought we could do this year, so far we have been able to do,” Chief Executive Stephen Hester told a media call, adding that the insurer had seen an improvement in underwriting profit across its regions.

In August, RSA appointed a new CEO to its Scandinavia division, where there have been large losses such as a commercial property fire in Denmark. It is also exposed to climate change-related weather losses in Canada.

RSA did not publish profit numbers in its third-quarter trading update released on Thursday.

Group net written premiums of £4.9 billion ($6.3 billion) were flat overall compared with the first nine months of 2018, but premium income fell 3% in the insurer’s British and international business, which it said was in line with its plans.

RSA’s shares rallied 3.4% to 550 pence by 0836 GMT, making it one of the best performers in the FTSE 100 index.

KBW analysts said the stock offered value, although Panmure Gordon cut its recommendation to sell from hold, citing concern about the Scandinavia and Canada businesses.

RSA said it had started a cost-cutting program, which incurred an £8 million restructuring charge in the third quarter.