Royal & Sun's profit freefalls
Costs associated with GST and the purchase of Tyndall Australia has punished Royal & Sun Alliance Australia, dramatically reducing its net profit of $47 million in 1998 to $2 million in 1999.
Costs associated with GST and the purchase of Tyndall Australia has punished Royal & Sun Alliance Australia, dramatically reducing its net profit of $47 million in 1998 to $2 million in 1999.
The company’s operating profit in 1999 was $73 million, compared to $71 million in 1998.
The general insurance business produced an operating profit of $59 million com-pared with $66 million in 1998. Gross insurance premiums experienced a 10 per cent increase to $1.5 billion in 1999.
Direct insurers AAMI and Australian Alliance were strong performers, with im-proved results from the Group’s niche financial insurance operations.
As a result of the Tyndall acquisition the Group’s funds under management and ad-ministration more than doubled to $7.5 billion. The group also secured full ownership of direct insurer AAMI during the year.
"Whilst we are disappointed with the financial result, we believe that significant groundwork was undertaken during 1999 which will be of considerable future benefit to the group," RSA managing director Mike Wilkins said.
Life insurance premiums nearly doubled to $406 million and operating profit be-fore exceptional items almost trebled to $14 million, from $5 million in 1998. RSA said that improvement was principally the result of the $740 million acquisition of Tyndall Australia group in May 1999.
It said the life risk insurance business of the combined group benefited from an improved expense performance although the full benefit of those efficiencies was offset by a strengthening of reserves in the income replacement area.
Recommended for you
In this episode of Relative Return Insider, host Keith Ford and AMP chief economist Shane Oliver discuss the latest shock consumer price index numbers, which rose to 3.8 per cent in October, as well as the shifting US market and calls for super funds to invest in infrastructure projects.
In this episode of Relative Return Insider, host Keith Ford and AMP chief economist Shane Oliver discuss the Reserve Bank of Australia’s cautious stance in response to persistent inflation, subdued growth prospects, and political shifts affecting the nation’s journey towards net zero emissions.
In this episode of Relative Return, host Laura Dew speaks with Rachel White, head of financial adviser services at Vanguard about how advisers can help Australians to feel confident in retirement.
In this episode of Relative Return Insider, host Keith Ford and AMP deputy chief economist Diana Mousina take a look at the Reserve Bank’s unanimous decision to leave rates on hold on Melbourne Cup Day and whether future cuts are still on the cards.
