Royal & SunAlliance’s underwriting performance dips

In a year dubbed “tough” and “challenging”, Royal & SunAlliance’s (RSA) Canadian operation has posted largely disappointing figures for the 1999 financial year. Net income dropped from $172 million in 1997 to $123 million in 1998, and then a further 11.4%, to $109 million for 1999. Poor underwriting results were largely to blame, deteriorating from a combined ratio of 101.4% to 105.5% in the past two years. 1999 saw a $64 million underwriting loss for RSA.

Despite the lackluster performance, RSA produced a return on equity of 12.9% for 1999, compared to the industry average of 6.5% for the same year. Net premiums written rose 4.6% last year, mostly due to growth in personal lines. A slight decline in commercial premiums written came as a result of intense price competition and loss of selected business, the company reports.

Also, RSA’s life and investment products brought in net income of $13.3 million, up dramatically from $5.7 million in 1998. This came about despite a drop in sales of 12% for life products and 16% for investment products during the year in question. RSA is poised for strategic changes, according to president and CEO Robert Gunn. The company is planning to “radically transform” the way it does business, including an emphasis on providing customers with “the spectrum of insurance and investment products”.