Insurer RSA reports 24% drop in value of Irish premiums

Company is in middle of shake-up following discovery of accounting irregularities

British insurer RSA said premiums fell in the first quarter of the year. Photographer: Simon Dawson/Bloomberg

British insurer RSA said premiums fell in the first quarter of the year. Photographer: Simon Dawson/Bloomberg

Thu, May 8, 2014, 09:18

Insurer RSA has reported a 24 per cent drop in the value of premiums written in Ireland over the first three months of the year.

The company is in the middle of a root and branch shake-up, steered by new chief executive Stephen Hester, after accounting irregularities at its Irish operation hit its finances last year, prompting the departure of several senior executives.

RSA said net premium income at its Irish arm dropped to £75 million (€91 million) from £99 million last year.

“In Ireland, comparison with 2013 is difficult due to the previously announced accounting issues,” the company said.

However, it said underlying premiums were down around 8 per cent driven by ongoing work to remediate the business, with strong rate increases being put through across the motor and liability books.

In a trading statement today, the British insurer said premiums fell in the first quarter of the year, reflecting tough trading conditions in core western European markets and the impact of a turnaround plan that has seen some businesses sold off.

RSA said the headline fall in underlying net written premiums was 9 per cent from a year earlier to £1.98 billion for the quarter.

In February, the company began a drive to raise up to £1.6 billion in capital and tapped shareholders for around half in a rights issue that wrapped up in April.

The “action plan” also involves disposing of non-core assets and streamlining the remaining operations.

RSA has already secured the sale of operations in the Baltics and Poland and said it expects to announce more disposals during 2014.

The company said it expects premiums could be up to 10 percent lower for the full year as a result of the disposals.

Mr Hester said premiums and profits trends remained in line with expectations, though market conditions were challenging and the company had much to achieve in its turnaround notwithstanding “intense activity” in the first quarter.

“There remains much to do and we operate in a challenging and competitive market place. 2014 is a foundation year, but one where we hope to make solid progress,” he said.

Bad weather in core markets cost the insurer £111 million of which £60 million was attributed to the UK where the quarter started with widespread flooding and winter storms.

An earthquake in Chile in April is likely to have cost RSA £15-£20 million, the company added.