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Royal & Sun Alliance weathers the insurance storm

02 February, 2008

Royal & SunAlliance, the UK's second-largest insurer, has increased full-year profits from £649m to £670m pre-tax, despite a £120m bill for last summer''''''''s flooding.The latest news and analysis from the insurance and pensions industry. The group's combined operating ratio - a measure of its profitability - was 94.9pc, compared with 93.3pc in the preceding year. It would have been better, at 92.8pc, but for the flooding hit. The company, which is to change its name to RSA in April, to "simplify and refresh" its corporate brand, expects the ratio to be around 95pc for 2008.Andy Haste, chief executive, described the current market conditions as "challenging", but said the insurer had delivered profitable growth in each of its regions."The results have been delivered against the backdrop of a competitive rating environment, adverse large losses and weather, including the UK floods, and volatile investment markets." Net premiums rose 6pc to £5.8bn, driven largely by the international division which increased 8pc to £2.5bn, compared with just 3pc in the UK to £2.7bn. Emerging markets delivered 16pc growth to £615m.A 10pc increase in the final dividend to 4.53p, payable on June 6, lifts the total 19pc to 7.01p.Housebroker Cazenove said: "We believe the better-than-expected dividend underscores management's confidence in the future prospects of the business."