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First-half profits increase 8pc to £28m at Irish arm of insurer RSA

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Uncertain times: Traffic levels dropped during lockdown as people worked from home and gardaí operated checkpoints. PHOTO: OWEN BRESLIN

Uncertain times: Traffic levels dropped during lockdown as people worked from home and gardaí operated checkpoints. PHOTO: OWEN BRESLIN

Uncertain times: Traffic levels dropped during lockdown as people worked from home and gardaí operated checkpoints. PHOTO: OWEN BRESLIN

Insurance group RSA reported profit of £28m (€31m) in Ireland for the first half of this year, up 7.7pc on 2019.

This is despite premiums falling 11pc to £143m, mainly due to lower levels of motor insurance, according to interim results from the group.

Unsurprisingly, the company had fewer insurance claims in the second quarter of the year due to the lower economic activity levels on the back of the Covid-19 pandemic.

RSA's combined ratio for Ireland - a measure of profitability used by insurance companies - was 82pc.

Anything below 100pc means an insurance company is profitable.

In Ireland, the company's combined ratio result was much better than the UK ratio of 96.1pc.

"Ireland reported another excellent performance, generating an underwriting profit of £28m on a combined ratio of 81.9pc," RSA said.

"Improved attritionals and large loss ratio helped to improve the combined ratio versus H1 last year," it added.

Overall, the company's business operating result of £349m was up 13pc on the same period last year.

Net written premiums for the group fell by 3pc year on year to £3.1bn.

RSA said the impact of Covid-19 on operating profits was broadly neutral in the first half of this year, "though related financial market charges reduced our statutory results".

"The recovery path from the pandemic itself is not yet certain, as well as its human and economic consequences," said Stephen Hester, RSA CEO.

"Nevertheless, we see good prospects for RSA remaining resilient and emerging strongly from this period," he added.

The UK-headquartered company also warned that the impact of claims is currently complex to interpret as claims patterns are distorted by the impact of lockdowns.

The pandemic has seen the company deal with around 39,000 travel claims in the first six months of the year, with estimated costs of £26m.

This reduces to £1m after its reinsurance. It has received 2,700 claims for wedding cancellations, with an estimated cost of £9m.

In addition, RSA - which is one of the world's longest-standing general insurers - has received claims under business interruption coverages due to the pandemic, which it has set aside £47m for.

However, it said "most business interruption coverages are not expected to be eligible under their terms for Covid-19 claims".

The company is one of eight participants in the UK's Financial Conduct Authority "test case" on business interruption coverage wordings in the UK, the result of which, RSA said, may have wider implications for the industry.

"We are not able to comment on this process at present, beyond confirming that RSA's position on its business interruption wordings is supported by external legal advice," the insurer said.

In April the group decided to suspend its final dividend for 2019.

Yesterday it said that an interim dividend for this year is not currently being announced.

Irish Independent