RSA Group's Solvency II coverage ratio above target range

Written by Adam Cadle

02/08/2017

RSA Group has recorded Solvency II coverage ratio of 163 per cent after dividend accrual, slightly above the 130% to 160% target range.

The group said an underlying capital generation added 14 points of coverage. "Market movements, fx and IAS 19 were a small negative, reflecting the impact of narrower AA corporate bond spreads on IAS 19 pension accounting, offset mainly by a positive impact from equities," the firm said.

Group operating profits were recorded at £360m, a rise of 15% compared to H1 2016: £312m.

Investment income was recorded at £171m (H1 2016: £187m) down 9% versus the same period last year reflecting the impact of disposals and ongoing reinvestment at lower yields.

The investment portfolio decreased by 4% during the first half to £13.1bn. The movement was driven primarily by cash outflows for corporate debt restructuring. At 30 June 2017, high quality widely diversified fixed income securities represented 85% of the portfolio (31 December 2016: 85%). Equities (largely REITs) represented 2% (31 December 2016: 1%) and cash 6% of the total portfolio (31 December 2016: 7%).

"The quality of the bond portfolio remains very high with 98% investment grade and 71% rated AA or above. We remain well diversified by sector and geography," the insurance firm stated.

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