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 the latest episode of Relative Return Insider, host Maja Garaca Djurdjevic and AMP’s Shane Oliver break down US and Australian rate cuts, soaring gold, and bitcoin’s volatility.
In the latest episode of the Relative Return Insider, host Maja Garaca Djurdjevic and AMP’s chief economist Shane Oliver unpack the surprising twists in the Australian economy, diving into the latest GDP numbers, what’s really driving consumer spending, and what it all means for the Reserve Bank’s next moves.
In this episode of Relative Return, host Laura Dew chats with Roy Keenan, co-head of fixed income at Yarra Capital Management, to discuss the evolving fixed income asset class, his sector preferences, and the RBA’s rate-cutting policy.
In this week’s episode of Relative Return Insider, AMP chief economist Shane Oliver joins the show to dissect the ongoing government economic reform roundtable and reflect on the wish lists of industry stakeholders – and whether there is hope for meaningful reform.
