RSA Insurance Group Plc has reduced its reliance on the U.K. motor market for earnings and cut jobs as Chief Executive Officer Stephen Hester looks to boost profitability and shore up the balance sheet.
RSA reported a 39 percent drop in premiums in U.K. personal motor insurance in the first six months of the year as it ended relationships with some brokers and closed its eChoice brand, the London-based company said in a statement today. The insurer said it cut more than 100 jobs in Britain and is considering additional reductions in the second half.
“The U.K. motor market everyone knows has not made any money,” Hester, 53, said on a conference call from London. “Our U.K. business is smaller than what it was so the company is not as reliant on the sector. We simply can’t afford to write the level of unprofitable business.”
A Towers Watson & Co. report last month showed that U.K. prices for new car insurance policies have fallen for a record 10 straight quarters amid regulatory changes and increased competition. Car insurers Admiral Group Plc and Esure Group Plc said they see no sign of a recovery.
RSA, which operates in more than 30 countries, reported a pretax profit of 69 million pounds ($116 million) in the first half as it reduced employment across all regions, including Scandinavia. That compares with a loss of 494 million pounds in the second half and a 250 million-pound profit a year earlier.
The insurer also took another loss from its Irish unit of 64 million pounds as the company continues to repair an accounting scandal that led to three profit warnings in the fourth quarter and the resignation of Simon Lee as CEO.
“We are pleased to rebound straight back into profit after a wrenching and difficult loss-making year,” Hester said. “Ireland is proving a bit more expensive than we had thought. We believe we can get Ireland more or less into profit by 2015.”
The former CEO of Royal Bank of Scotland Group Plc said the company is looking to sell additional assets, including in Europe, after raising more than 600 million pounds from sales in eastern Europe, Canada and China. He said the company plans to restart dividend payments when it reports full-year results for 2014. The insurer scrapped shareholder payouts in February.
The shares were down 1.4 percent to 437.9 pence at 2 p.m. in London trading, leaving the stock up 7.9 percent this year. That compares with a 1 percent gain for the FTSE 350 Nonlife Insurance Index in 2014.