2017 INTERIM RESULTS 2 August 2017
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF THAT JURISDICTION This presentation may contain ‘forward-looking statements’ with respect to certain of the Group’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”, “believe”, “plan”, “seek”, “continue” or similar expressions identify forward-looking statements. These forward-looking statements are not guarantees of future performance. By their nature, all forward-looking statements involve risk and uncertainty because they relate to future events and circumstances which are beyond the Group’s control, including amongst other things, UK domestic and global economic business conditions, market-related risks such as fluctuations in interest rates and exchange rates, the policies and actions of regulatory authorities (including changes related to capital and solvency requirements), the impact of competition, inflation, deflation, the timing impact and other uncertainties of future acquisitions or combinations within relevant industries, as well as the impact of tax and other legislation or regulations in the jurisdictions in which the Group and its affiliates operate. As a result, the Group’s actual future financial condition, performance and results may differ materially from the plans, goals and expectations set forth in the Group’s forward-looking statements. Forward-looking statements in this presentation are current only as of the date on which such statements are made. The Group undertakes no obligation to update any forward-looking statements, save in respect of any requirement under applicable law or regulation. Nothing in this presentation should be construed as a profit forecast. Basis of presentation This presentation uses alternative performance measures, including certain underlying measures, to help explain business performance and financial position. Further information on these is set out in the 2017 Interim Results announcement.
AGENDA Introduction 1 2 Business Improvement Actions Regional update 3 4 2017 Interim Results 5 Q&A
INTRODUCTION
Introduction THE RSA PROPOSITION 1 ‘Focused mid-cap’, a proven value creation strategy in P&C Insurance 2 A ‘self help’ story with ‘high quality’ underpinnings 3 Resilient in challenging economic and financial market conditions Attractive EPS & dividend increases – delivered and in prospect 1 4 1 Based on consensus and Company targets/ambitions 5
Introduction 2017 INTERIM RESULTS HIGHLIGHTS Winning for customers and for shareholders Strategy & balance sheet where we want it. Restructuring 1 complete Outperformance continues, driven by self-help actions 2 Record 1 underwriting profits & combined ratio (93.2%) 3 – Written premiums up, underlying loss ratio and costs down again EPS 2 up 31%, dividend up 32%, ROTE 2 16.6% 4 Focused on drive towards ‘best in class’ performance levels 5 1 Since 2005 on like-for-like basis 2 Refers to underlying measure 6
BUSINESS IMPROVEMENT ACTIONS
Strategy PURSUIT OF OUTPERFORMANCE Strong customer franchises 1 2 Disciplined strategy, focused on strengths, seeking to avoid mistakes A balance sheet that protects customers and the company 3 Intense and accomplished operational delivery – improving customer 4 service, underwriting and costs 8
Performance PERFORMANCE IMPROVEMENT LEVERS Targets ‘Best in class’ COR ambitions Advance customer service • Scandinavia <85% • UK & International <94% Digital platforms for convenience, flexibility and speed • 1 • Canada <94% Increase customer satisfaction and retention • Sharpen customer acquisition tools • Further improve underwriting Earnings Elevate underwriting disciplines • • High quality, repeatable earnings 2 Ongoing ‘BAU’ portfolio re-underwriting • • Attractive EPS increases Invest in tools and technology • • ROTE 13-17% Optimise reinsurance • Drive cost efficiency • Deploy ‘lean’, robotics & process redesign Dividend 3 • Optimise overheads & procurement • Regular payout 40-50% , plus • Site consolidation & outsourcing additional payouts as available • Automation and prudent Technology Key enablers: Underpinned by strong balance Focused performance culture sheet and capital management 9
Customer CUSTOMER MEASURES SHOWING CONTINUED IMPROVEMENT Examples Customer retention (%) Denmark Commercial broker new business (DKKm) Scandinavia Denmark Commercial: +84% 85 75 • Significant new business growth 74 74 82 82 83 73 212 • Improved risk selection 115 • Focus on sales capabilities H1 2016 H1 2017 Personal Commercial Canada Johnson (direct) YoY PIF change Canada Canada Johnson (direct): 10 88 82 87 87 80 85 76 76 • H1 2017 first period of PIF 0 growth since 2014 -10 -20 • Improved risk models & -30 marketing -40 -50 Q2’14 Q2’15 Q2’16 Q2’17 Personal Commercial UK UK Commercial Regions new business UK Commercial Regions: 77 78 85 83 82 81 (£m) 72 70 +15% • Increased focus on new business pipeline 28 24 • >50% increase in new business per FTE • No. >£50k cases won up 25% Personal Commercial H1 2016 H1 2017 FY14 FY15 FY16 H1 17 10
Customer CUSTOMER INITIATIVES DELIVERING Examples Johnson Canada digital platform Automated claims handling in Sweden Opportunity: Accelerate digital capability development to Opportunity: Improve claims efficiency through drive growth and improve customer satisfaction automated settlement of single accident motor claims Approach: Deliver an effortless experience at every interaction: Approach: Automate end-to-end claims handling process • Digital elements to engage, attract and inform customers Outcome: Customer self-serve and straight through • Combined customer portal for all digital sales processing. • eCare/online help using digital tools & concierge service online • 70% of single vehicle claims notified on the web • Self service transactions • 80% damage estimates approved by decision logic • Analytics & insight • Robotics handling data and processing payments Digital progress to date: • 38k automatic SMS status sent (reducing incoming calls by 17%) New policies sold originating in digital channels, up 27% • High risk claims passed as exceptions to a claims Organic Growth YoY in 2017 handler Quote & Bind Completed online home and auto quotes, up 36% YoY Fully embedded digital policy servicing to reduce 16% Policy Servicing calls by year end 2017 Other initiatives New online support hub to provide instant answers; Predictive analytics on quote conversion focuses on quoting and • Customer Experience 86% “very satisfied” with online chat experience winning business with the highest propensity for success Developing digital affinity platform & partnerships with • Customer Service Platform in Denmark invites customer into the Affinity Partnerships top clients to increase penetration claims process, giving full transparency and access Highly functioning agile digital teams delivering new Awarded “Best digital customer experience” in Danish insurance • Agile & Culture capabilities at rapid pace (every 4 weeks) market 11
Underwriting LOSS RATIO IMPROVEMENTS Ongoing ‘BAU’ Invest in tools and Tighten underwriting Underwriting portfolio 2 1 3 technology actions discipline re-underwriting Attritional loss ratio (%) Group 1 Scandinavia 58.6 66.5 64.5 55.2 54.9 63.1 H1 2015 H1 2016 H1 2017 H1 2015 H1 2016 H1 2017 Canada 52.2 UK & International 61.2 58.1 2 57.9 49.0 48.9 1.0 57.1 H1 2015 H1 2016 H1 2017 H1 2015 H1 2016 H1 2017 1 Group shown ex disposals and at constant exchange rates 12 2 Canada adjusted for c.1pt benign indirect weather, as disclosed at H1 2016. More normal patterns in H1 2017
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