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

BUSINESS REVIEW
European Specialty Lines
In European Specialty Lines premiums
were up by 11% at constant exchange
(4% as reported) driven by strong
growth in Spain.
Italy
We have had a challenging time in Italy
with difficult market conditions. As we
have focused on remediation we have
reduced net written premiums by 18%
to £200m at constant exchange (down
23% as reported), with targeted reductions
in Motor and cancellation of contracts with
underperforming agents. An underwriting
loss of £51m was an improvement on
2011 (£63m), and was achieved despite the
two earthquakes in May and severe weather.
We expect to break even during 2013.
Ireland
We are now Ireland’s largest general
insurer, with net written premiums growing
by 5% to £348m at constant exchange
(down 1% as reported) driven by a strong
performance from 123.ie and wins in
Commercial. This compares to a 6%
contraction in market premiums in 2012.
With an underwriting result of £25m (2011:
£24m) and a COR of 94.2% (2011: 92.6%),
we outperformed the market in terms
of growth and profitability.
MARKET CONDITIONS
The UK, Italy and Ireland are some of
the Group’s most competitive markets,
with significant economic pressures on
consumers and a tough business environment.
Price comparison sites grew in Pet, Home
and Motor in the UK, with new entrants
during 2012. Commercial lines and Motor
are challenging across the markets with the
soft pricing environment continuing.
CUSTOMER
Our customers are at the heart of
everything we do, and with one of the
wettest years on record in the UK, they
have relied on us more than ever. Over
36,000 weather claims were received in
2012. In the aftermath of a number of
floods, we deployed our Emergency
Response Vehicle providing support for
our customers and the local community
on occasions when they needed us most.
Where the circumstances were appropriate,
innovative drying techniques were deployed
enabling our customers to move back into
their homes only 20 days after the flood
waters receded.
PEOPLE
In 2012 we featured in the Sunday Times
‘Best Big Companies to Work For’ list, ranked
at number six. We have continued to focus
on employee engagement by prioritising
investment in three main areas: recognition;
learning and development; and contributing
to the communities in which our people work.
OUTLOOK
During 2012 we have taken strong
management actions to remediate portfolios
which are underperforming. We have
focused on the areas we said we would,
delivering an improvement to the underlying
result. Growth has been achieved in those
areas where we believe we can achieve
sustained profitability.
The market will remain very competitive
throughout 2013. We believe that building
on the actions taken in 2012 and the
improvement to our underlying result we
will be well placed to deliver greater levels
of profitability across the UK and Western
Europe region in the future and we are
confident about our prospects.
UK Personal NWP (£m)
UK Commercial NWP (£m)
Household
Motor
Pet
Property
Liability
Motor
Marine
UK combined operating ratio
98.2%
Ireland net premium growth
5% (at constant exchange)
Ireland combined operating ratio
94.2%
670
416
233
491
280
598
319
UK HIGHLIGHTS
• Net written premiums up 2%
• Underwriting profit of £39m (2011: £62m)
• Maintained expense ratio of around 14%
• Ranked six in 2012 Sunday Times
‘Best Big Companies to Work For’.
Customer
• Motability team awarded winners of
North West Contact Centre of the year
• MORE TH>N named as Pet insurance
provider of the year for 3rd year running.
Commercial
• Net written premiums grew 6%
to £1.7bn
• Underwriting loss of £31m, good
performance in Marine, offset by
Commercial Motor and Liability
• COR of 100.4% (2011: 98.7%).
Personal
• Net written premiums reduced by 3%
due to actions to achieve profit over
volume in Personal Motor
• Growth in strategic areas; 3%
in Household and 18% in Pet
• Underwriting profit of £70m
(2011: £60m)
• COR of 95.6% (2011: 95.7%) despite
weather costs which were £49m
worse than 2011.
IRELAND
• NWP growth of 5% at constant exchange
due to 123.ie and Commercial lines
• Underwriting profit of £25m
(2011: £24m)
• Excellent COR of 94.2% (2011: 92.6%)
despite challenging economic conditions
• Number 1 position secured with
market-leading position strengthened.
ITALY
• Taking the right action to remediate
the business
• NWP decline of 18% at constant
exchange as we reduce exposure
in Personal Motor
• Underwriting loss of £51m
• Excluding the impact of two earthquakes
in May, losses were significantly reduced
in 2012 and we expect to breakeven
during 2013.
Annual Report and Accounts 2012 | RSA | 23