RSA Premiums Drop 16%, Focuses on Most Profitable Business

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RSA Insurance Group Plc reported a 16 percent drop in net written premiums in the first nine months of this year as the insurer withdrew from less profitable business.

The company, which was hit with an accounting scandal in Ireland, said premiums fell to £5.68 billion ($9.1 billion) in the period through September from £6.74 billion [$10.747 billion] a year earlier, in a statement today. Net asset value increased 12 percent to £2.9 billion [$4.6237 billion] from June.

“The building blocks to support RSA’s recovery are coming together,” Chief Executive Officer Stephen Hester said in the statement. The decline in premiums reflects “our portfolio action plan, a more return focused underwriting approach and soft markets overall.”

RSA shares have rebounded 18 percent this year, making them the best-performing insurer in London trading. Hester, who succeeded Simon Lee in February, has been cutting costs and selling assets to boost profitability and shore up the company’s balance sheet.

The former CEO of Royal Bank of Scotland Group Plc said his strategy to “reset” the insurer continues to run ahead of schedule after raising £740 million [$1.18 billion] from selling assets across Europe and Asia year to date. Further disposals are targeted over the next 12 months, the company said.

The shares declined 0.7 percent to 480.5 pence [$7.66] at 8:18 a.m., giving the company a market value of £4.9 billion [$7.8136 billion].

“As discussed in August, we have also made good progress this year in our balance sheet clean-up work, though we still anticipate some further actions during the remainder of 2014 in addition to ongoing cost reduction charges,” Hester said in the statement.

A year ago, the London-based insurer issued its first of three profit warnings, saying it would miss its earnings target in the wake of European windstorms. One week later, the insurer suspended three executives in Ireland amid an investigation into its claims and finance operations.