(Alliance News) - RSA Insurance Group PLC on Friday reported its last annual results as a London-listed company.
In mid-November, RSA had agreed to be sold in a deal with a two-headed consortium which valued the insurer at GBP7.2 billion.
The deal will see the insurer divided between Canada's Intact Financial Corp and Scandinavian insurer Tryg AS.
In a year that was dominated by the pandemic, the insurer saw its profit fall on a drop in net written premiums but was able to improve its combined ratio, leading to a jump in underwriting profit.
For 2020, the London-headquartered general insurance company recorded pretax profit of GBP483 million, down 1.8% compared to GBP492 million in 2019.
RSA's underwriting profit rose to GBP502 million from GBP346 million, as the insurer's combined operating ratio improved to 91.9% from 94.6% in 2019.
Any ratio below 100% means an insurer is making a profit from its underwriting.
The insurer's loss ratio fell to 62.8% from 67.0%.
Personal Lines - which make 56% of net written premiums - had a combined ratio of 86% in 2020, while Commercial Lines - 44% of net written premiums - posted a 97% combined ratio.
Business operating result grew to GBP703 million from GBP597 million.
RSA said the pandemic was a net drag of GBP42 million on its business operating result in 2020 - stemming from premiums, claims and investment income.
Investment income dropped 16% year on year to GBP258 million.
Net written premiums slipped 3.1% to GBP6.22 billion from GBP6.42 billion. Net earned premiums dropped 4.0% year on year to GBP6.20 billion from GBP6.46 billion.
RSA noted its written premiums were flat excluding Covid-19 claims.
Net written premiums slipped 1% in Scandinavia and 2% in the UK & International, but this was partially offset by a 3% growth in Canada.
"Outside of Covid-19 impacts, areas of profitable growth were balanced by planned underwriting effects in portfolios being remediated, with the process largely complete," RSA added.
Chief Executive Stephen Hester said: "We are pleased to report excellent results for RSA in 2020. Underwriting profits are sharply up to new record levels and return on tangible equity has risen above our target range.
Naturally, the impact of Covid-19 was the major feature of our year, as for society as a whole. We prioritised the safety of our employees and sustaining service to customers. The group paid out some GBP4.6 billion in 'normal' claims whilst also providing for over GBP250 million in Covid-19 specific claims, together with offering a range of other customer support measures."
RSA's Solvency II coverage ratio improved to 170% at the end of 2020 compared to 168% the year before.
"We have built a high performing company and 2020's results showcase the value creation thereby achieved. This in turn drove the 52% premium we were able to negotiate in the fourth quarter through an all cash bid from Intact and Tryg. The offer is on track to complete in the coming months, ending a chapter for RSA but not the whole story," Hester added.
Turning to its takeover, RSA said it is making "good progress" in satisfying the various conditions before closing the deal - which is expected to complete in the second quarter of 2021.
The deal will see Intact run RSA's Canadian, UK & International operations, while Tryg will take RSA's Swedish and Norwegian businesses. The two will co-own RSA's Danish business.
Tryg's contribution will be GBP4.2 billion with Intact's portion of the deal amounting to GBP3.0 billion.
Under the deal, RSA shareholders will receive 685 pence in cash for each share. In addition, RSA shareholders will be entitled to receive the insurer's interim dividend of 8p.
On Friday, RSA noted it will not pay a final dividend for 2020 as this would reduce the cash consideration payable under the terms of the acquisition.
Shares in RSA Insurance were down 0.2% in London on Friday morning at 675.00 pence each.
By Paul McGowan; paulmcgowan@alliancenews.com
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