RSA Insurance operating profit up 20% in first half

RSA Insurance reported a drop in pre-tax profit but a rise in operating profit for the first half, as it lifted its dividend.

Group operating profit was up 20% from the first half of last year to £312m while pre-tax profit fell to £148m from £281m, partly because the previous year benefited from disposal gains.

Underwriting profits increased 63% to a record £119m but weather and large losses for the insurer came in at £59m, which was worse than planned and the previous year’s £49m due to costs from the Alberta wildfire and UK and European floods in June.

RSA declared an in interim dividend of 5p per share, up from 3.5p in 2015.

Chief executive Stephen Hester said: “We are delighted with RSA’s progress towards our demanding ’best in class’ ambitions. In tough, competitive insurance markets and with significant financial market volatility, our results are even more satisfying. Particularly pleasing is the track record we are building of setting out plans and then achieving them in a high quality way.

“Strategic focus has now been achieved through completion of our principal disposal programmes. Performance improvement is coming through strongly, driven by underwriting gains and cost re-engineering. In fact our interim results were actually held back by volatile items in weather/large losses.”

The company said it was insulated from Brexit impacts via non-sterling profits and separate regulated European subsidiaries. However, the effect on interest rates is negative for insurers generally.