RSA Insurance H1 operating profit up 15% but divi disappoints

RSA Insurance reported a 15% rise in first-half group operating profit on Wednesday thanks to strong performances in Scandinavia and Canada, but the increase in its dividend fell short of expectations.

Operating profit increased to £360m from £312m in the same period a year ago, which was comfortably ahead of consensus forecasts of £338m, while group premiums advanced 11% to £3.4bn, or 3% at constant currency.

Pre-tax profit was up 78% at £263m, the interim dividend was bumped up 32% to 6.6p per share and RSA said it remains on track to deliver more than £400m of gross annualised savings by 2018. The dividend was below consensus of 7p per share.

Meanwhile, the combined ratio - which measures claims and costs as a proportion of premiums - improved to 93.2% from 94.7% the year before.

The insurer’s Solvency II ratio improved to 163% from 158% in 2016 and now sits above its 130-160% target range. It benefited from an 18 percentage point increase following the disposal of UK legacy liabilities, which is one-off in nature.

Chief executive Stephen Hester said: “RSA did well in the first half. We delivered outperformance, showing record underwriting results, attractive earnings and dividend growth with strong return on capital. Pleasingly, customers are also growing business volumes with us.

“Across the group the focus is on making progress towards our best-in-class ambitions. And while RSA is now measuring against higher performance standards, there is much more that can be done to improve."

At 1048 BST, the shares were down 2.2% to 642.50p.