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RSA Insurance climbs as it logs record underwriting profit

The record underwriting profit helped boost group profits to £492mln from £480mln

RSA Insurance Group - RSA Insurance climbs as it logs record underwriting profit

RSA Insurance Group PLC (LON:RSA) shares rose on Thursday as the FTSE 100 firm delivered a record underwriting profit for 2019.

For the year ended 31 December, the company reported that its underwriting profit had risen to £405mln, up 60% year-on-year, which helped boost pre-tax profits to £492mln from £480mln.

READ: RSA Insurance boosted as profits and underwriting quality improve

Net written premiums, meanwhile, dipped to £6.42bn in the year from £6.47bn.

RSA also reported a combined ratio, a measure of profitability for insurers, was at 93.6%. A ratio of over 100% means the firm is paying out more money in claims that it is receiving in premiums.

As a result of the higher profits, RSA increased its final dividend to 15.6p per share from 13.7p, taking the full dividend for the year to 23.1p from 21p in 2018.

Looking ahead, the company said it expected net written premiums for 2020 to be similar to 2019 at around £6.4bn.

“Significant management renewal and a repositioning of our UK & International division are showing good promise”, said chief executive Stephen Hester.

In a note, analysts at Peel Hunt, which rate RSA at ‘buy’ with a 600p target price, said the “low interest rate environment” in its markets will “put pressure” on the company’s results in 2020, however, this would be offset by further improvements in the underwriting quality.

“We see the stock re-rating as it delivers on the restructuring in the UK and takes a more focused approach to underwriting commercial lines”, they added.

The shares were 2% higher at 542.8p in early trading.

Quick facts: RSA Insurance Group

Price: 381.1 GBX

Market: LSE
Market Cap: £3.94 billion

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