June 19, 2006 by Canadian Underwriter
Royal & SunAlliance has announced plans to reduce costs including 1,500 layoffs (1,350 of them in the U.K. and Scandanavian regions) and a future strategy of double-digit growth in its international division, including Latin America and Canada.
Part of Royal’s growth strategy includes acquiring the personal lines business of Shillington Insurance Brokers, an Ontario-based firm, Royal has announced in a press release.
Royal wants to achieve 130 million (CD$268.2 million) of annualized expense savings, representing approximately 9% of the 2005 cost base, to be delivered by mid 2008.
“The new expense savings targets are a key part of [Royal’s] aim to reduce its expense ratios (excluding commission) in the UK and Scandinavia to under 15% and its operating expense ratio for its intermediated business in Canada to single digits,” the company announced in its release.
Andy Haste, Group CEO of Royal & SunAlliance commented: “We have a clear strategy of running general insurance businesses with strong market positions to deliver sustainable profitable performance. The decision to reduce headcount is always a difficult one but necessary to ensure we remain as competitive as possible and to continue to deliver on our objective of sustainable profitable performance.”
Royal said it will “continue to look for bolt on acquisitions to drive profitable growth in its key markets and segments and the Group is announcing today two transactions in Scandinavia and International.”
On the international side, the company said its aim is “to double its premiums in Latin America by 2010 and to continue to drive strong double digit growth from Johnson, its direct operation in Canada.
“As part of these plans, the Group today announces that it has signed a purchase agreement to acquire the personal lines business of Shillington Insurance Brokers and its subsidiary, which will add approximately 20 million (CD$41 million) of premium to the Johnson business.”
Royal noted its international division “accounts for approximately 25% of the Core Group’s premiums and earnings and has a strong balance of businesses in emerging and mature markets.
“International is R&SA’s fastest-growing region and the Group is targeting continued annual double premium digit growth. This comprises around 10% from mature markets [such as Canada’s] and 15% from emerging markets.”