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    RSA   GB00BKKMKR23

RSA INSURANCE GROUP

(RSA)
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RSA Insurance : 2021 Interim Results and Condensed Financials

08/04/2021 | 03:16am EDT

RSA INSURANCE GROUP LIMITED

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE

SIX MONTH PERIOD ENDED 30 JUNE 2021

Table of contents

Interim management report

2

Primary statements

4

Basis of preparation and significant accounting policies

1.

Basis of preparation

9

2.

Significant accounting estimates and judgements

10

3.

Adoption of new and revised accounting standards

11

Risk and capital management

4.

Risk and capital management

12

Significant transactions and events

5.

Discontinued operations

19

Notes to the condensed consolidated income statement, condensed consolidated statement of

comprehensive income and dividends

6.

Operating segments

22

7.

Net investment return

24

8.

Income tax

25

9.

Dividends

25

Notes to the condensed consolidated statement of financial position

10.

Goodwill and intangible assets

26

11.

Financial assets and fair value measurements

26

12.

Deferred tax

32

13.

Cash and cash equivalents

33

14.

Share capital

33

15.

Issued debt

34

16.

Insurance contract liabilities

35

17.

Retirement benefit obligations

36

18.

Related party transactions

38

19.

Events after the reporting period

39

20.

Results for the year 2020

39

Notes to the condensed consolidated statement of cash flows

21.

Reconciliation of cash flows from operating activities

40

Appendix

A. Exchange rates

41

B. Alternative performance measures reconciliations

42

Responsibility Statement of the Directors in respect of the half-yearly financial report

44

Independent review report to RSA Insurance Group Limited

45

1

INTERIM MANAGEMENT REPORT

For the 6 month period ended 30 June 2021

RSA Insurance Group Limited (the Company), formerly RSA Insurance Group plc, was re-registered as a private limited company on 26 May 2021 and 100% of the Company's ordinary share capital was purchased by Regent Bidco Limited (a wholly owned subsidiary of Intact Financial Corporation (IFC)) on 1 June 2021. On 1 June 2021, the Company disposed of its operations in Scandinavia (Codan A/S) and Canada (Roins Holdings Limited), and these have been classified as discontinued operations (refer to note 5 for further information).

Principal activity

The principal activity of the Company, its subsidiaries and associates (together the Group or RSA) remains the transaction of insurance and related financial services predominantly in the United Kingdom, Ireland, Europe and Middle East.

Business review

The Group reports a profit before tax of £4,308m for the six month period to 30 June 2021 of which continuing operations contributed a loss before tax of £(249)m and discontinued operations a profit before tax of £4,557m (six month period to 30 June 2020: £11m and £200m profit before tax respectively).

On a continuing basis, profitable underwriting performance was impacted by specific accounting adjustments. These were in respect of reserve strengthening, primarily to align to IFC practices and to reflect heightened estimation uncertainty along with an increased level of reserve margin to reflect the methodology of IFC (refer to note 16 insurance contract liabilities) and £(61)m write-down of software assets (refer to note 10 goodwill and intangible assets). On the same continuing basis, losses before tax consisted of £(143)m underwriting losses (2020: £14m profit), £57m investment result (2020: £60m), £(6)m central costs (2020: £(3)m) and £(157)m of other charges (2020: £(60)m). Other charges were also hit by £(104)m of costs relating to the transaction and £(16)m of early redemption fees on the repayment of senior debt (within interest costs). Refer to note 6 operating segments for a full profit and loss breakdown.

Profit from discontinued operations before tax included a £4,388m gain on the disposal of the Group's operations in Scandinavia and Canada (refer to note 5 discontinued operations).

Net written premiums were £2,898m of which £1,717m were in respect of continuing operations and £1,181m from discontinued (2020: £1,446m and £1,689m respectively).

Net assets of the Group are £2,799m (2020: £4,730m).

Other important events that have occurred after the period end include the announcement on 22 July 2021 that Motability Operations Ltd intend to switch to another insurance provider upon completion of the existing contract with RSA in 18 months' time. No significant impact is anticipated in the 2021 financial results or financial position. Also, on 27 July 2021, the Group entered into a reinsurance contract for adverse development coverage which will reduce the potential volatility in the Group's claims liabilities. Refer to note 19 Events after the reporting period for more detail.

Related party transactions

The group received a capital injection from Regent Bidco Limited of £1,021m during the period and also declared a dividend in specie of £6,914m. Refer to note 18 for further information on all related party transactions.

2

Key performance indicators (KPIs)

The Group use both IFRS and non-IFRS financial measures (alternative performance measures (APMs)) to assess performance, including common insurance industry metrics, as well as measures that management and the Board consider are useful to enhance the understanding of its performance and allow meaningful comparisons between periods and business segments.

As the Group is now a wholly owned subsidiary with no publicly listed ordinary share capital, the KPIs reported by the Group have been reassessed and have subsequently reduced.

The KPIs most relevant to the financial performance of the Group are now as follows:

  • Net written premiums for continuing operations £1,717m (2020: £1,446m): premiums incepted in the period, irrespective of whether they have been paid, less the amount shared with reinsurers. They represent how much premium the Group gets to keep for assuming risk. The Group targets growth - that is without compromising underwriting performance.
  • Underwriting result* for continuing operations £(143)m (2020: £14m): net earned premium less net claims and underwriting and policy acquisition costs. The Group aims to achieve an underwriting result that is as sustainably high as possible - that is without uncompetitive pricing or compromising reserves. The Group targets further improvements to its underwriting result.
  • (Loss)/profit before tax for continuing operations £(249)m (2020: £11m): the Group seeks to maximise its profit before tax, which is a key statutory measure of the earnings of the Group.

*The underwriting result is an Alternative Performance Measure (APM). Refer to Appendix B for reconciliation to the nearest IFRS measure. A 'Jargon buster' can also be found on pages 181 to 183 of the RSA Insurance Group plc Annual Report and Accounts 2020.

Principal risks and uncertainties

Following the disposal of the Group's operations in Scandinavia and Canada, the principal risks and uncertainties of the Group have been reassessed. These are set out in note 4, risk and capital management.

3

CONDENSED CONSOLIDATED INCOME STATEMENT

STATUTORY BASIS

For the 6 month period ended 30 June 2021

Re-presented1

(Unaudited)

(Unaudited)

6 months

6 months

30 June 2021

30 June 2020

Note

£m

£m

Continuing operations

Income

Gross written premiums

2,327

1,979

Less: reinsurance written premiums

(610)

(533)

Net written premiums

6

1,717

1,446

Change in the gross provision for unearned premiums

(155)

33

Change in provision for unearned reinsurance premiums

127

43

Change in provision for net unearned premiums

(28)

76

Net earned premiums

1,689

1,522

Net investment return

7

58

39

Other operating income

41

47

Total income

1,788

1,608

Expenses

Gross claims incurred

(1,657)

(1,245)

Less: claims recoveries from reinsurers

430

268

Net claims

(1,227)

(977)

Underwriting and policy acquisition costs

(645)

(576)

Unwind of discount

(3)

(3)

Other operating expenses

(131)

(26)

(2,006)

(1,582)

Finance costs

(31)

(15)

(Loss)/profit before tax from continuing operations

6

(249)

11

Income tax expense

8

(20)

(1)

(Loss)/profit after tax from continuing operations

(269)

10

Profit from discontinued operations, net of tax

5

4,528

154

Profit for the period

4,259

164

Attributable to:

Owners of the Parent Company from continuing operations

(272)

(2)

Owners of the Parent Company from discontinued operations

4,528

154

Total owners of the Parent Company

4,256

152

Non-controlling interests

3

12

4,259

164

1Comparatives have been re-presented to show Scandinavia and Canada as discontinued operations. Refer to note 5 for further information.

The following explanatory notes form an integral part of these condensed consolidated financial statements.

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME STATUTORY BASIS

For the 6 month period ended 30 June 2021

Re-presented1

(Unaudited)

(Unaudited)

6 months

6 months

30 June 2021

30 June 2020

£m

£m

(Loss)/profit for the period from continuing operations

(269)

10

Profit for the period from discontinued operations

4,528

154

Profit for the period

4,259

164

Items from continuing operations that may be reclassified to the income statement:

4

This is an excerpt of the original content. To continue reading it, access the original document here.

Disclaimer

RSA Insurance Group plc published this content on 04 August 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 04 August 2021 07:15:06 UTC.


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Managers and Directors
Scott Egan Chief Executive Officer & Executive Director
Mark Steven Hodges Chairman
Charlotte Jones Independent Non-Executive Director
Clare Jane Bousfield Independent Non-Executive Director
Sally Bridgeland Independent Non-Executive Director