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

EMERGING MARKETS
Emerging Markets operates across 20 countries
in Latin America, Asia, the Middle East and
Central and Eastern Europe
“Emerging Markets has delivered
excellent top line growth and our
underwriting result continues
to improve as we achieve scale.
We remain confident of achieving
our net written premium target
of £2.2bn by 2015”
Paul Whittaker,
Chief Executive, Emerging Markets
STRATEGY
We remain committed to delivering organic
growth, an improved underwriting result
and an increase in return on capital.
We have strong strategic positions (top five)
in a number of markets and look to achieve
scale in others through bolt on acquisitions.
We also aim to achieve organic growth and
improved underwriting results through the
development of differentiated business
models or scale in niche market segments.
We are committed to a significant reduction
in the expense ratio driven by strong
growth in written premiums and restricted
growth in expenses. We will also pursue
tactical expense reduction programmes
particularly in high expense ratio businesses.
Our strategy continues to focus on Affinity,
Specialty, Motor, Marine and Small and
Medium Enterprises (SME). In each of these
areas we develop solutions which can be
replicated across our regions effectively
and efficiently.
In 2012 we have taken further actions
to implement our strategy.
Our growth ambitions in Asia and our focus
on reducing management overheads have
led us to reorganise our Asia Middle East
region. As from January 2013 Asia will
be a separate region and will include our
associates in India and Thailand while the
Middle East will be integrated into our
Central and Eastern Europe region.
In July 2012 we completed the acquisition
of El Comercio and ACG in Argentina,
making RSA the sixth largest P&C insurer
in the country. We have signed 31 new
affinity deals in 2012 and we continue
to invest in talent in our focus areas.
We are redeploying capital with the sale of
our subsidiary in the Dutch Caribbean and
our withdrawal from the Czech market.
2012 OVERVIEW
In 2011, we set our target for Emerging
Markets premium to double to around
£2.2bn by the end of 2015 and we remain
on track to achieve this.
Net written premiums were up by 17%
to £1,237m at constant exchange (12%
as reported) and including our associates
in India and Thailand total premiums
were £1,540m.
Throughout the year we have continued
to maintain underwriting discipline despite
intense competition. Where necessary we
have taken strong pricing action to achieve
our target returns and we have maintained
a tight grip on expenses. Our underwriting
result of £33m (2011: £3m) reflects a strong
performance in all three regions and an
improvement in our expense ratio of 1.2%.
The COR of 96.9% (2011: 98.7%) reflects
the improved underwriting result.
Latin America
Premiums were up by 20% to £766m
at constant exchange (14% as reported),
with double digit growth in four countries.
Argentina grew particularly strongly
with premiums up by 79% aided by the
acquisition of El Comercio and ACG in July
2012 as well as underlying growth of 36%.
Central and Eastern Europe
Premiums were up by 9% to £224m
at constant exchange (2% as reported).
Growth continued in the Baltics during 2012
and our Direct businesses in Poland and
Russia once again delivered strong top line
growth of 13% at constant exchange (5%
as reported).
Asia and the Middle East
Premiums were up 14% to £247m at
constant exchange (15% as reported)
driven by strong performance in Oman
and Specialty with growth of 23% and
15% respectively, at constant exchange.
Our Indian associate premiums were up
10% at constant exchange to £153m (down
3% as reported) and our Thailand associate
grew 13% to £150m at constant exchange
(12% as reported) driven by Motor.
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| RSA | Annual Report and Accounts 2012