Royal & SunAlliance reports 8% rise in business

May 9 2008

MORE Than owner Royal & SunAlliance has reported an 8% rise in first-quarter personal insurance business on the back of hikes in motor and household insurance premiums.

The group, which is changing its name to RSA later this month, said it had seen personal insurance premiums increase to £265m, thanks largely to its Liverpool-based More Than subsidiary.

RSA said premium rates had increased by 5% for personal motor insurance and by 4% for household cover, but said customers chose to stay with the group despite the higher renewal costs, with a retention rate of more than 80%.

It added that partnerships with corporate clients to provide “white label” insurance products had also contributed to the premium growth, with total UK net premiums up 3% to £661m in the first three months of the year.

The premium rate rises come after RSA was hit by £120m in claims from last summer’s UK floods, although the costs failed to prevent it from posting a 4% rise in 2007 annual profits.

RSA, which employs around 1,300 people in Liverpool, said yesterday that it had “taken the right action” with rates, despite tough competition in the UK market.

UK insurers are also due to come under pressure amid soaring claims costs, according to a report out today which says rising personal injury claims look set to push up motor insurers’ claims costs by 28%, to £10.9bn, during the coming five years.

Andy Haste, group chief executive of RSA, said: “Market conditions remain challenging, however, we continue to exercise tight operational and financial management, including taking the right action on rate and expenses, to deliver sustainable profitable performance.

“We remain confident of achieving a strong result in 2008 and beyond.”

RSA increased commercial insurance rates by 8% for motor policies and 3% for property, while professional liability rates were kept on hold, compared with a decrease of 4% at the same time last year.