AFFINITY CHANNELS We work with partners such as building societies, banks, retailers, motor manufacturers, charities, utilities and unions to offer their customers appropriate insurance products. Through Affinity partnerships we are able to offer a bespoke service to each partner, ranging from full underwriting to marketing support.
WE AIM TO DELIVER A PROFESSIONAL, FAIR AND SPEEDY CLAIMS SERVICE AT ALL TIMES
The operating result was £636m, while profit before tax of £474m was after the remaining £5m reorganisation costs for the UK cost 1.5bn 2.3x the requirement 108p +2p on 2009
In Italy, we continued to take action on risk selection and rate, with premiums down 1% to £262m. We also saw the benefit of management actions to improve performance in Italian
In Central and Eastern Europe, premiums were up by 15% to £202m due to the first full year of consolidation of our Direct operations in Poland, the Czech Republic and Russia. Our Direct operations in these
As it stands today, and assuming a return to more normal levels of weather losses, in 2011 we expect to deliver a COR for the Group of better than 95%.
We share our strengths around our businesses to develop excellence across the Group.
We maintain a conservative reinsurance programme and have a prudent reserving policy.
The Personal lines portfolio has continued to grow in all countries, driven by new Affinity partnerships and rate increases. The Swedish
driven by signifi cant rate increases, the introduction of new products and successful Affi nity deals and acquisitions. The recent acquisition of 123 Money, gives us a Direct presence in Ireland taking us to the number two position in the market. Ireland also delivered an excellent COR of 90.9% despite the severe weather.
We delivered the £70m of savings announced in February 2009 ahead of schedule and remain confident of achieving our target expense ratio of around 14% by the end of 2012.
Indian associate of almost £1.1bn. This is a strong result against the backdrop of the continued economic downturn in some of our key markets.
for Lithuania and Estonia is more positive, with expectations of real GDP growth in 2011. Our
Going forward, given our reserving policy, we would expect positive prior year development to continue to be a significant feature of the underwriting result.
The fixed interest portfolio remains concentrated on high quality short dated assets, 98% of bonds are investment grade, with 78% rated AA or above and the average duration is 3.1 years.
These changes will both reduce the future liabilities of the schemes and cut the annual cost.
• We continued to make solid progress on extending our risk capability to support our transition into the Solvency II regulatory environment
Committees held to determine a recommended level of outstanding claims and aggregate outstanding claims reserves
Future, the sustainability charity, carry out an annual assessment to check we are focusing on the right issues.
risks are actively monitored and reviewed regularly by the Board. In 2010, the main risks identified included the forthcoming UK
In Canada we experienced 99% customer satisfaction levels thanks to fast track claims handling, specialised claims and empathy training for employees coupled with Voice of the Customer telephone surveys that give customers the opportunity to provide immediate feedback.
• In Denmark, we are offering customers a 10%-20% discount if they install an energy and water control distributor to prevent leaks and fire risk.
Europe at GE Capital UK, Western Europe and Eastern Europe (fi nancial services) and
Care (charity). Previous roles include Director of BUPA and Redbourn Group Limited
International Central Leadership Team. Anne was previously CFO at Maersk Data for two years and spent 13 years with KPMG as a State
Authorised Public Accountant, where she was involved in work with publicly listed companies, M&A and restructuring.
Executive (Group CEO), Chief Financial Officer (CFO), Group Risk and other functions together with regular functional presentations including
• Assessing risk issues, making recommendations in relation to risk appetite to the Board and report on risk exposure on a regular basis
Canadian business in June 2011. The Non-Executive Directors regularly host informal meetings with senior executives outside of the Executive
The GAC has unrestricted access to Company documents and information, as well as to employees of the Company and external professional advisers.
Notes: *See page 55 for details of the Remuneration Committee’s activities during the year.
‘close and continuous’ programme. The Group also engaged closely with the FSA regarding development of the Group’s Solvency II Internal
• To recommend the quantum of capital required for the Individual
The BRC oversees and challenges the results of stress and scenario tests carried out by the Group Risk team. These tests are carried out each year with the involvement of senior executives to assess the Group’s resource to take on new work. Secondments and rotations will be formalised to enhance knowledge sharing and from 1 January 2011 the centres of excellence within the team were further formalised and strengthened.
In considering the appropriateness of the going concern basis, the Board has reviewed the Group’s ongoing financial commitments for the next 12 months and beyond. The Board’s review included consideration of the Group’s underwriting plans, strong regulatory capital surplus, diverse insurance risk profile, considerable undrawn financing facilities and highly liquid investment portfolio. As a result of this review the Directors have satisfied themselves that it is appropriate to prepare these financial statements on a going concern basis.
Preference shareholders are only entitled to receive notice of, attend, speak and vote at general meetings if the dividend payable on the preference shares is in arrears at the date of the Notice; a resolution is proposed that affects the rights of the preference shareholders; a resolution is proposed to wind up the Company; a resolution is proposed to reduce the capital of the Company (other than a redemption or purchase of shares); or in such other circumstances as the Board shall determine. In any of these situations the preference shareholders may only vote on the relevant resolution and not on all the business of the general meeting.
Team who are actively involved in the Programme. Participants work in global teams on strategically important business challenges, researching the issues and recommending a solution.
Details of our environmental programme can be found on page 33 of the Business Review and on the Group’s website at www.corporateresponsibility.rsagroup.com
• The total of the capital and revenue reserves of the Group (subject to certain adjustments).
• Up to a further 33% of net cash bonus paid may be reinvested in voluntary Deferred Shares under the LTIP.
UK based executives who are members of the top 100 executives in the Group (Top 100) participate in a bonus plan which is structured in the same way and measured using the same metrics as the plan described above. For outstanding performance a cash bonus of up to 80% of base salary and Deferred Shares worth up to 33% of the cash bonus are achievable.
5. Simon Lee’s allowances include 17.5% of basic salary as a retirement allowance, paid monthly. During 2010 the amount paid was £75k. He also received car benefits and additional taxable travel benefits worth £34k and medical benefits worth £1k.
Notes: 1. The Executive Directors each had a beneficial interest as at 31 December 2010 in the voluntary Deferred Shares of 27.5p each held under the LTIP and in the Matching Shares under Sharebuild which are not included in the above table. These are disclosed on pages 68 and 69.
As at 23 February 2011 each Executive Director’s holding under Sharebuild had increased to 3,039 shares following usual monthly purchases.
2. Deferred Shares are inclusive of voluntary Deferred Shares and compulsory Deferred Shares. Voluntary Deferred Shares are purchased by Capita Trustees Limited on behalf of each participant using part of the net annual bonus paid to them and are held in trust for three years. These Deferred Shares are not at risk of forfeiture and may be withdrawn from the trust at any time, but the related Matching Share awards would lapse if the voluntary Deferred Shares are withdrawn within three years of acquisition. Compulsory Deferred Share awards are granted as part of the annual bonus. These Deferred Shares will normally vest in three years from the date of grant subject to continuous employment with the Group.
Insurance Group plc for the year ended 31 December 2010 which comprise the consolidated income statement, the consolidated statement of comprehensive income, the consolidated statement of changes in equity, the consolidated statement of financial position, the consolidated statement of cashflows and the related notes on pages 78 to 137. The financial reporting framework that has been applied in their preparation is applicable law and International
As explained more fully in the Directors’ responsibilities statement, the Directors are responsible for the preparation of the consolidated financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the consolidated financial statements in accordance with applicable law and
• Have been properly prepared in accordance with IFRS as adopted by the European Union
Cash and cash equivalents at beginning of the year 1,105 1,614
In the income statement, earned premiums and expenses continue to reflect their respective components of the net movement in the provision for unearned premium. The change therefore has no impact on the results presented in 2010 and the comparative period in 2009 nor on the key performance indicators derived from items appearing in the income statement. The Directors consider that there is sufficient information in the comparative information in the 2009 financial statements for the effect of the revised presentation of the financial position as at 1 January 2009 to be readily understood and therefore no statement of financial position as at 1 January 2009 has been presented.
(including unrealised investment gains), the financial asset is designated as at fair value through the income statement. Other investments comprising loans, reinsurance deposits and other deposits are classified as loans and receivables.
is recognised to reflect the amount estimated to be recoverable under the reinsurance contracts in respect of the provisions for losses and loss adjustment expenses reported under insurance contract liabilities. The amount recoverable from reinsurers is initially valued on the same basis as the underlying provisions for losses and loss adjustment expenses.
Group remains liable for the settlement in the event of default by the annuity provider. Any gain or loss arising on the purchase of an annuity is recognised in the income statement at the date of purchase.
Insurance contracts are those contracts that transfer significant insurance risk at the inception of the contract. Insurance risk is transferred when the Group agrees to compensate a policyholder if a specified uncertain future event (other than a change in a financial variable) adversely affects the policyholder. Any contracts not meeting the definition of an insurance contract under IFRS are classified as investment contracts or derivative contracts, as appropriate.
• The impact of any curtailments or settlements during the period
from S&P, improved from ‘A’ (stable outlook) in December 2010, ‘A’
The new solvency framework for insurers being developed by the EU, referred to as ‘Solvency II’, is intended in the medium term to achieve greater harmonisation of approach across EU member states to assessing capital resources and requirements. There will be continued uncertainty until all the rules are finalised and the Group is actively participating in shaping the outcome through its involvement with European and UK
The Group, in common with the insurance industry in general, is subject to litigation, mediation and arbitration, and regulatory, governmental and other sectoral inquiries and investigations in the normal course of its business. In addition, the Group is exposed to the risk of litigation in connection with its former ownership of the US operation. The
The Group manages operational risk using a range of techniques and tools to identify, monitor and mitigate its operational risk in accordance with Group’s risk appetite. These tools include Risk and Control Self Assessments, Key Risk Indicators (e.g. fraud and service indicators), Scenario
Analyses and Loss Reporting. In addition the Group has developed a number of contingency plans including Incident Management and Business
Capital expenditure: Net written premiums and non current assets from major geographical regions
Reinsurers’ share of change in insurance contract liabilities for claims (781) (108)
6. EARNINGS PER SHARE ATTRIBUTABLE TO THE ORDINARY SHAREHOLDERS OF THE PARENT COMPANY CONTINUED
The carrying amount of Group occupied property that would have been recognised had the assets been carried under the cost model at 31 December 2010 is £144m (2009: £140m).
Syn Mun Kong Public Limited Company is listed on the Stock Exchange of Thailand. The fair value of the Group’s holding at 31 December 2010 is £11m (2009: £6m).
Available for sale financial assets: Financial assets at fair value through the income statement: Derivative assets at fair value through the income statement – 22 – 22
Pension fund actuarial gains net of tax – – 58 58 – 58
Provision for unearned premiums (gross of acquisition costs) at 31 December 4,229 3,838
Provisions for losses and loss adjustment expenses at 31 December 11,694 10,613
Each of the UK defined benefit pension schemes has changed its rules to allow for increased commutation following ‘A day’ in April 2006. In 2009 the commutation factors were broadly cost neutral (i.e. when valued on the IAS 19 basis, the amount of cash taken is approximately equal to the value of the pension being given up). The Group therefore made no allowance for commutation in the accounting valuation. In 2010, the Group followed the funding valuation assumptions, and an allowance was made for future commutation using the current commutation factors.
The value of the awards granted during 2010 is £35m (2009: £25m) of which £8m (2009: £6m) is charged in the income statement. The balance of the value of the awards will be charged to the income statement during the remaining vesting periods.
The structure of the plan allows for a number of different types of awards to be made. Voluntary Deferred Shares are purchased by participants from net bonus payable (limited to a maximum value of 33% of net bonus); in addition, for senior executives, the Remuneration Committee may defer a portion of an individual’s gross bonus (limited to 33% of that bonus) into an award over shares referred to for the purpose of the plan as
On 3 March 2010, the Group acquired 100% of the share capital of Assurance Goguen Champlain Insurance Incorporated in Canada.
The total consideration received, consisting of cash and cash equivalents, was £39m and the cash and cash equivalents included in the disposals was £113m. In addition, the assets and liabilities included in the disposals comprised intangibles £8m, investments £35m, reinsurers’ share of insurance contract liabilities £39m, other assets £10m, insurance contract liabilities £146m and other liabilities £19m.
The future aggregate minimum lease payments under non cancellable operating leases are as follows: Land and buildings £m £m
We have audited the Parent Company financial statements of RSA Insurance Group plc for the year ended 31 December 2010 which comprise the Parent Company statement of comprehensive income, the Parent Company statement of changes in equity, the Parent Company statement of financial position, the Parent Company statement of cashflows and the related notes 1 to 10. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRS) as adopted by the European Union and as applied in accordance with the provisions of the Companies Act 2006.
• The Parent Company financial statements are not in agreement with the accounting records and returns or
PARENT COMPANY STATEMENT OF CHANGES IN EQUITY for the year ended 31 December 2010
Total comprehensive income for the year – – – 69 – 359 428
Dividends – paid (note 7) – – – – – (299) (299)
RSA Insurance Group plc provides services and benefits to its subsidiary companies operating within the UK and overseas as follows: • Provision of technical support in relation to risk management, information technology and reinsurance services. Services are charged for annually on a cost plus basis, allowing for a margin of 5% (2009: 5%)
Receivable from related parties: Receivable from subsidiaries, interest bearing loans 1,836 1,401
Payable to related parties: Payable to subsidiaries, interest bearing loans 779 442
Registered Office and Group Corporate Centre 9th Floor, One Plantation Place, 30 Fenchurch Street, London
Announcement of the half year results for the six months ended 30 June 2011, the ordinary interim dividend for 2011 and the second preference dividend for 2011.
Company’s plans and its current goals and expectations relating to its future financial condition, performance results, strategic initiatives and objectives. Generally, words such as “may” “could”, “will”, “expect”, “intend”, “estimate”, “anticipate”, “aim”, “outlook”,