ANNUAL REPORT AND ACCOUNTS 2012 - RSA, Annual Report ...

GROUP CHIEF EXECUTIVE’S REVIEW
Another strong performance in 2012
as we position the Group for the next
stage of its journey
“I’m looking forward to the
opportunities ahead of us.
We will take the Company
from strength to strength”
Simon Lee, Group Chief Executive
The 2012 results showed solid underlying
organic growth, supplemented by wellexecuted
acquisitions. We delivered
healthy premium growth of 5% on a
constant exchange rate basis and our
profits reflect good contributions from
Scandinavia and Canada, improving trends
in the UK & Western Europe and strong
profit from Emerging Markets as
operational leverage emerges.
We continue to successfully execute
our strategy to grow premiums, improve
underwriting profitability and focus our capital
on those parts of our business which offer
the highest growth and returns. As we do so,
I have been encouraged by the response of
our people, and by the leadership shown by
my executive team.
We have excellent market positions in
many parts of the world. We are doing
exactly what is necessary to position
ourselves for the next stage of our journey,
as we build on our growth ambitions
overseas and our long-term success story
in our mature markets.
The Board has taken the decision to
recommend rebasing the dividend, reflecting
the expectation of a prolonged low bond
yield environment and greater opportunities
to develop and grow the business outside
the UK. The proposal is to reduce dividend
payments by 33% in 2013, therefore we
anticipate recommending a similar change
to the interim dividend. This is the correct
and prudent long-term decision for the
business and will enable the Group to realise
its medium-term growth opportunities.
2012 RESULTS
In 2012, net written premiums rose by
5% to £8.4bn, and the underwriting result
was unchanged at £375m. The combined
operating ratio was 95.4% (2011: 94.9%).
The investment result was down 11%.
This gave us an overall insurance result of
£806m (2011: £860m), including significant
contributions from all our business regions
but, in particular, our mature markets
outside the UK as well as many of our
emerging markets.
The operating result was down 6% to
£684m and profit before tax was £479m
(2011: £613m). The proposed dividend for
the year is 7.31p.
Our financial position includes a regulatory
capital surplus of £1.2bn, which represents
coverage of 1.9 times. Net asset value per
share was 101p.
SUCCESSES AND OPPORTUNITIES
We have seen sustained growth in both
our Emerging Markets and Global Specialty
Lines businesses. In addition to delivering
strong organic growth, the year saw the
successful acquisition of L’Union Canadienne
in Quebec, as well as acquisitions in
Argentina of El Comercio and Aseguradora
de Créditos y Garantías.
We have also taken action to exit
or rationalise those markets where
our performance has fallen short of
expectations. During the year we closed
our business in the Czech Republic
and announced the sale of our business
in the Dutch Caribbean.
The reshaping of our UK business and the
remediation of our Italian business are on
track, but more remains to be done. The
plans we have in place are the right ones
and we will be pushing hard to deliver on
these and ensure all parts of the business
make the contribution they should to our
overall performance.
All regions have worked hard to put the
customer at the heart of everything we
do. The Think!Customer programme in
Scandinavia has had noted success and
we are ensuring relevant lessons are
learned across the organisation.
We continue to pay considerable attention
to our corporate behaviour and our
wider responsibilities to the individuals,
businesses and communities we work with.
Two examples are the projects we have
undertaken to help draw attention to
environmental degradation, asking RSA
staff worldwide to propose plans to help
us reduce our carbon footprint, and taking
the creators of the best ideas to see for
themselves the impact deforestation is
having on the Brazilian rainforests. And
in the UK, our ‘Fit to Drive’ campaign is
pressing the government to do more to
ensure drivers are safe on the road through
more regular eye tests.
Looking ahead, I am confident about what
we can achieve and how we can ensure the
business continues to thrive.
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| RSA | Annual Report and Accounts 2012