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.
Attachments
- Original document
- Permalink
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.