Insurance group Royal & SunAlliance has reported a 21% rise in operating profit for its first nine months, totaling GBP590 million. However, this result falls just under analysts' forecasts, which Reuters places at an average of GBP596.4 million.
In the corresponding period in the previous year, Royal & SunAlliance (RSA) made GBP488 million. It has blamed the below-expectation 2006 result on tough conditions in the UK market.
The numbers are a touch below expectations. I think the thing to pick out is the deterioration of the UK commercial performance. Rates have now deteriorated in that sector for seven consecutive quarters, Richard Gradidge, analyst at Numis Securities, told Reuters.
The rise in operating profit has been largely due to the drop in claims thanks to the favorable weather in the UK, although a slight increase in claims occurred in the third quarter.
The company’s shares, which rose by 20% at the start of the year, are now trading down by 1.5%.
Despite the lower profit, according to Reuters, Andy Haste, group CEO of RSA, commented that the outlook was still positive and that the insurer had a strong pipeline of new businesses. He said that the company had signed an exclusive deal with UK mortgage broker PaymentShield to provide household insurance, which would yield GBP300 million in 2007-2008.