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Royal & Sun Alliance Insurance Group, the parent of Royal & SunAlliance USA, reported a Group operating result of $458 million for the first half of 2002. The company also announced an underlying operating result of $558 million that excludes an additional reserve provision of $100 million for losses from the World Trade Center disaster. This matches the Group’s 2001 six-month result of $556 million (366 million pounds), on a UK reporting basis with an exchange- constant rate of 1.52.
The 2002 six-month result reflects continuing good performance across the Group’s commercial and direct personal lines of business. Globally, the company’s underwriting result (excluding WTC) improved by nearly 25 percent, helping to offset lower investment returns and a decline in the performance of the life insurance operations in the UK.
On a worldwide basis, the Group’s half-year combined ratio for 2002, excluding the World Trade Center provision, improved to 103.0 percent from 104.3 percent for the first half of 2001 and 107.6 percent for the corresponding period in 2000. Including the World Trade Center development, the combined ratio for the half- year was 104.7 percent.
Royal & SunAlliance USA’s underlying six-month combined ratio (excluding WTC) also improved to 104.1 percent in 2002 vs. 104.5 percent in 2001 and 107.8 percent in 2000.
“Our property and casualty operations in the U.S. are for the most part, producing strong results,” Steve Mulready, president & Chief Executive Officer of Royal & SunAlliance USA, said. “Our personal lines businesses are performing very well, while rates for our commercial property lines continue to improve. We’ve also achieved good rate increases in our workers compensation business.”
Worldwide property and casualty insurance premiums for the first half of 2002 were $6,487 million vs. $6,790 million for the same period in 2001. This decrease stemmed entirely from a one-year quota share reinsurance partnership with Munich Re. On an underlying basis excluding the quota share arrangement, global property and casualty premiums grew by 15 percent.
Royal & SunAlliance USA reported $1,524 million in net written premiums for the first six months of 2002. On an underlying basis excluding the quota share agreement, overall net written premiums were $1,693 million, vs. $1,705 million for the first half of 2001.
The increase in reserves for losses from the World Trade Center disaster resulted from adjustments in the size of business interruption losses reported by insureds. About one-quarter of that amount is attributable to actual claim notifications and three-quarters to anticipated claim developments.
In looking ahead to the rest of the year, Group Chief Executive Bob Mendelsohn noted that the company is well positioned for the future.
“We continue to focus on achieving a return on capital that exceeds our cost of capital by four percent through leveraging our core competencies of underwriting and risk and claims management. We are also focusing on improving results through control of our expense base. We are continuing to see substantial upward movement in premium rates in many lines of business.”