UK: Motor insurance market slows down progress at RSA

MORE Than parent RSA Insurance said today that “aggressive” rate cuts in the motor cover market saw its UK business come under further pressure in the first three months of the year.

Growth in UK net written premiums ground to a halt in the quarter to March 31, at £726million against £725m a year earlier, after a 4% slide in RSA’s motor insurance arm.

The group has been reducing its exposure to the highly competitive UK motor market and prioritising profit over sales volumes, but said industry-wide moves to slash rates continued to make it a “challenging market”.

It said new business volumes had stabilised for motor insurance, following a 19% plunge in 2012, but the group still increased its rates, with average premiums 4% higher year-on-year in March against 10% in December.

The pressure in its motor market offset progress on household insurance and pet cover, where premiums rose 1% and 5% respectively. Commercial premiums also remained flat at £396m.

RSA disappointed investors earlier this year when it slashed its full-year dividend by a third after a 6% fall in annual operating profits to £684m after taking a hit on last summer’s UK floods and two earthquakes in Italy.

UK premiums rose 2% to £3billion last year, but underwriting profits were £39m against £62m a year earlier, primarily due to the impact of weather in the first half

Yesterday, however, the group sought to assure that it had made an “encouraging” start to the year thanks to a better performance from its overseas markets, with total group premiums rising 5% at constant exchange rates to £2.3bn.