RSA announces 2018 preliminary results

• Pre-tax profit £480m, up 7%.  Dividends 21p per share, up 7% (final dividend 13.7p)
• Underlying results down, driven by higher weather costs and large loss challenges in Commercial Lines; especially London Market business
• Extensive underwriting action underway, including portfolio exits announced in 2018
• Underlying EPS 34.1p (2017: 43.5p), but c.42p proforma for portfolio exits and reinsurance additions¹
• Underlying return on tangible equity 12.6% (2017: 15.5%) versus 13-17% target range

Stephen Hester, RSA Group Chief Executive, commented:

“In 2018 RSA increased headline profits and dividends with a still attractive return on capital. At an underlying level however, the results represent RSA’s first down year since 2013. We believe strongly that 2019 will show a bounce back and are taking decisive action to that end.

Much went well in 2018, with excellent results in many of RSA’s Personal Lines businesses and good progress on expenses and other strategic initiatives. However, adverse weather costs and challenging Commercial Lines results exposed us to more volatility than expected.  This was most intense in the ‘London Market’ business which accounted for substantially all our underperformance in the second half.  We announced significant portfolio exits and initiated major pricing and re-underwriting programmes during the year. We have also made management changes and increased reinsurance coverage for 2019. Our performance ambitions for RSA are high, and unchanged. We recognise the need to demonstrate resumed progress against them.”