RSA increases interim dividend by 43 percent

LONDON, Aug 4 (Reuters) - British insurer RSA onThursday reported record first-half underwriting profits of 119million pounds ($158.3 million) and raised its interim dividendby more than 40 percent.

RSA has undergone a turnaround under ex-Royal Bank ofScotland boss Stephen Hester, who has streamlined thebusiness to focus on markets in Britain, Ireland, Scandinaviaand Canada.

Pre-tax profit for the six months to June 30 came in at 148million pounds, RSA said in a statement. This was ahead of acompany-supplied consensus forecast for 131 million pounds anddown from 288 million pounds in the first half of 2015 which wasboosted by disposal gains.

RSA's shares were up 2.8 percent by 0723 GMT.

The company maintained its medium-term return on equity of12-15 percent. In the first half, this figure, which is ameasure of profitability, was 12.8 percent.

RSA is still targeting an ordinary dividend payout ratio of40-50 percent with the possibility of additional payouts. Italso announced an interim dividend of 5 pence per ordinaryshare, a 43 percent increase.

In a call with reporters, Hester said he was especiallypleased with the earnings in an environment of sluggish economicgrowth and low interest rates.

"Our programme is all about self-help as opposed toreceiving external help," he said. "That makes it even moresatisfying that we've been able to produce the progress that youcan see from our half-year results."

Like many financial services companies, RSA has targetedcost cuts to compensate for the tough trading environment andthe company said it was on track to deliver in excess of 350million pounds in gross annualised savings by 2018.

Hester said Britain's vote in June to quit the EuropeanUnion raised challenges and uncertainties for RSA, but that ithad so far been a net positive for RSA thanks to a weakening ofsterling, which has boosted the value of earnings abroad.

($1 = 0.7517 pounds) (Reporting by Joshua Franklin. Editing by Jane Merriman)