Combined ratio in Canada drops to 98% in 2014 for RSA Group

RSA Group has released its 2014 preliminary results, which showed that its combined ratio for Canada in 2014 was 98%, compared to 100.7% in 2013.

Underwriting profit in Canada was £30 million last year, with a current year loss of £8 million and a prior year profit of £38 million. This compared to a £13 million underwriting loss in Canada 2013, the insurer said in the RSA Group 2014 Preliminary Results, released on Thursday.

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After including investment returns of £77 million (2013: £93 million), the insurance result in 2014 was £107 million, up from £80 million in 2013 for the entire Group.

“2014 has been a challenging year for RSA in Canada,” the report said. “However, we anticipate the business returning to better performance patterns, subject to volatile items such as weather trends. Our focus will be on delivering operational improvement, particularly underwriting and claims improvements, process simplification and modernization of technology and infrastructure.”

Net written premiums in Canada were down 3% on a constant exchange rate basis of £1.51 billion, with 5% volume reductions partly offset by 2% rate growth. Personal premiums were down 2%, with a 6% reduction in motor partly offset by growth of 5% in household. The latter premiums include double digit rate increases (on renewal business) as the market responded to the weather events of 2013 and early 2014; volumes were down 3%. In motor, premium reductions reflected the exit of certain broker relationships, lower new businesses and rates in Ontario and competitive conditions in Quebec.

“In Commercial, premiums were down 5%, driven mainly by the actions we have been taking on the portfolio, particularly where we have been re-underwriting or exiting poorer performing accounts,” the report said. “Property reductions of 5% are mainly driven by underwriting actions taken in Quebec, and liability reductions of 10% are due to the exit of unprofitable programs and market leading rating action.”

The level of weather losses, although lower than 2013, was higher than trend, impacting profitability, the company reported. “The weather loss ratio of 5% for the year compares to a five year average for our Canadian business of 4.3. Personal household and motor were both affected by the weather, with motor experiencing elevated claims frequency as a result of severe driving conditions in the first quarter.”