2017 PRELIMINARY RESULTS 22 February 2018
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 Preliminary results announcement.
AGENDA Introduction 1 2 Strategy & business improvement actions Regional update 3 4 2017 Preliminary results 5 Q&A
INTRODUCTION
Introduction THE RSA PROPOSITION ‘Focused mid-cap’, a proven value creation strategy in P&C insurance 1 A ‘self help’ story with ‘high quality’ underpinnings 2 Resilient in challenging economic and financial market conditions 3 Attractive EPS & dividend increases – delivered and in prospect 1 4 1 Based on consensus and Company targets/ ambitions 5
Introduction 2017 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 (94%) 3 – Written premiums up, attritional loss ratio and costs down again EPS 2 up 10%, dividend up 23%, ROTE 2 15.5% 4 Focused on drive towards best-in-class performance 5 levels 1 Since 2005 on like-for-like basis 2 Refers to underlying measure 6
Introduction 2017 FINANCIALS Group premiums of £6.7bn, up 4% (Core Group up 2% CFX) • First year of organic growth since 2012, as targeted • Underwriting result of £394m up 4%, and a new record for RSA: • − Combined ratio of 94% also a record. Scandinavia and Canada within best-in-class COR targets but scope for further progress − Poor UK & International results (Nat Cat affected); opportunity for 2018 bounce back − Attritional loss ratio improved again. Good progress in all businesses except the UK − Controllable costs down 8% in real terms; cost savings target upgraded for a fourth time to > £450m by 2019 Underlying PBT up 12%. Statutory profit after tax £322m (2016: £20m) • Solvency II coverage ratio of 163% (2016: 158%) • 1 Refers to underlying ROTE 7
STRATEGY & 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 9
Strategy LEADERS IN OUR MARKETS, WITH ATTRACTIVE BUSINESS BALANCE Marine & other 9% Commercial Household Commercial Motor 22% 9% By 9% Liability By 46% Customer… Product… 54% 22% Motor 19% Property Personal 10% Other UK & Scandinavia International 1 Direct 26% Indicative By 40% 40% target distribution profitability 55% channel… mix 19% Affinity Broker 20% Canada 1 Includes Ireland, specialty businesses in the Eurozone and Middle East 10 Note: Split based on 2017 Group NWP, except indicative profitability - based on operating profit ambitions
Strategy ‘FOCUSED MID-CAP’ PROPOSITION 1 2 3 Regional leadership Intense performance Operational and positions focus financial excellence +++ Aim to deliver superior performance and justify a superior P/E 11
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% or better 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 12
Customer GROUP RETURNED TO POSITIVE TOP LINE IN 2017 Customer retention (%) Personal Lines - Policies in force Scandinavia 84 83 +1% 82 82 74 75 73 +2% 70 +3% Personal Commercial Canada Scandi UK Canada 81 80 88 76 76 2016 2017 87 87 85 Commercial Lines – Volumes +1% Commercial Personal UK -3% 78 85 77 83 82 81 72 +1% 70 Scandi UK Canada 2016 2017 Personal Commercial 2014 2015 2016 2017 13
Customer CUSTOMER INITIATIVES EXAMPLES UK Personal Lines Digital claims in Denmark Opportunity: Enhances customer journey through Opportunity: Create a best-in-class personal lines the claims handling process, increases loyalty and platform, starting with Nationwide partnership drives efficiencies Approach: New IT platforms, redesigned products Approach: Market-leading tool that combines and customer journeys robotics, machine learning, and audit rules, with all stakeholders on one platform Outcome: Key Nationwide performance statistics, within just 4 weeks of go-live: Outcome: Improved customer satisfaction, extended self-service, lower handling times 86% retention at renewal +16 pts increase in NPS Liability +65 NPS in sales and service +6 pts increase in NPS Workers Compensation Simple, easy to understand modular Digital & customer – Johnson Canada insurance product Digital capability developments driving growth and customer satisfaction 30% online sales conversion New business and retention Customer managers using 1 CRM system 90,2% 88.2% (from 17 used in legacy businesses) 11,7% 9,9% Retention (12 month rolling) New business (12 month rolling) Dec Mar Jun Sept Dec 2016 2017 2017 2017 2017 14
Underwriting LOSS RATIO IMPROVEMENTS CONTINUE Invest in tools, Underwriting Ongoing ‘BAU’ portfolio Improve underwriting 1 2 3 technology & actions re-underwriting capabilities insights Attritional loss ratio (%) Group 1 Scandinavia 67.5 59.3 58.3 64.8 64.5 64.2 57.3 62.6 55.4 55.3 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 Canada UK & International 62.8 54.3 62.1 52.8 60.3 51.1 50.1 57.8 49.0 56.8 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 15 1 Group excluding disposals at constant exchange rates
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