By Simon Jessop
LONDON (Reuters) - British insurer RSA (L:RSA) posted a 1 percent year-on-year rise in net written premiums in the first quarter, more than offsetting the impact of adverse interest rate and currency moves and boosting its shares.
The company, which provides personal and commercial general insurance, said it took in a net 1.5 billion pounds ($2.3 billion) of premium income in the three months through March, with operating profit boosted by a series of disposals.
Those disposals, including in Singapore and Hong Kong, are part of a recovery plan put in place by Chief Executive Stephen Hester after he was drafted in following an accounting scandal in Ireland and series of profit warnings.
The company, which swung to a profit in 2014, said in a statement on Thursday net attributable profit was "a little ahead" of its plans and included anticipated gains from disposals.
Tangible net asset value during the period, funds available to shareholders after intangible assets such as goodwill are stripped out, rose 3 percent to just shy of 3 billion pounds, boosting tangible net asset value per share to 294 pence.
"RSA made encouraging progress in Q1. Premium income returned to modest growth. Costs are falling as planned," Hester said in the statement, although "lower interest rates and currency moves in our key territories continue to have adverse impacts, whilst insurance markets remain competitive."
Shares in RSA rose 2.4 percent in early dealings against a 0.7 percent fall in the broader UK stock market.
Hester said pricing had held up well in Scandinavia, where market conditions remained relatively stable, while pricing in Canada was more mixed, with improved conditions in personal household insurance offset by weakness elsewhere.
In its core UK market, meanwhile, pricing remained soft across all major lines of business.
The company said foreign exchange movements continued to hit its results, given sterling had risen against all its major currency exposures.
Interest rates, meanwhile, had fallen across its major markets, hitting the reinvestment rate on its bond portfolio, although it said it was still on track to deliver 380 million pounds of income in 2015.
Five-year government debt yields in Sweden and Denmark were down 10 basis points and 30 points, respectively, in the first quarter, while in Canada, yields fell 50 points.
The impact of reduced investment income has been raised by other insurers during the current earnings season including Prudential (L:PRU), where it contributed to a drop in new business profit.
RSA said its preparation for new European solvency rules was on course and capital ratios were up slightly compared with the year end, in line with its expectations.
($1 = 0.6560 pounds)