Premiums Grow 7% at RSA Insurance


LONDON -- Shares of RSA Insurance climbed 1% to 112 pence during early London trade this morning, after the FTSE 100 insurer announced premiums had grown 7% to 2.4 billion pounds.

RSA revealed its investment portfolio had expanded 4% to almost 15 billion pounds. The company said it expects investment income to be around 470 million pounds in 2013.

The insurer confirmed it expects its combined operating ratio -- a measure of premiums earned to costs and claims -- to be better than 95% this year.

RSA's Canadian and emerging market premiums grew 18% and 16% respectively. These divisions represented 28% of the group's total net written premiums for the quarter, and offset flat performance in RSA's established Scandinavian and U.K. markets.

RSA chief executive Simon Lee commented:

We entered 2013 with good momentum. It has been an encouraging start to the year for the Group with reported premium growth of 7%. We believe there are significant opportunities to drive further value across the Group.

I remain confident in our ability to achieve our targets for 2013 of good premium growth, a combined ratio of better than 95%, and return on equity of 10-12%.

RSA shocked the market in February by announcing a 33% cut of its final 2012 dividend to 3.9 pence. The company made no further reference to its 2013 dividend in today's update.

With a market cap of 4 billion pounds, RSA's shares trade at around 9 times expected earnings, and offer a prospective dividend yield of 6%.

Of course, whether that valuation, today's results and the future prospects for the insurance industry all combine to make shares of RSA a "buy" remains your decision.

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