RSA's revenues, profits and dividends disappoint - UPDATE

LONDON (ShareCast) - Insurance (Euronext: SIN.NX - news) giant RSA received premiums worth 8,138m pounds during 2011, an eight percent rise on 2010 at constant exchange rates. Profit before tax came in at £613m, a gain of 29% on the previous year while the combined operating ratio (COR), which measures claims and business expenses versus premium income, came in at 94.9%, better than the 96.4% achieved in 2010. A COR below 100% implies the main activity of writing insurance and paying out claims is profitable. Overall however, the group's revenues and profits came in below forecasts made by analysts at Credit Suisse (NYSEArca: CSMA - news) who had expected profit before tax of £719.2m on revenue of £8,272m. ON THE COMPANY´S DIVIDEND POLICY RSA has decided to grow its final dividend at the "modest rate" of 2% to 5.82p, giving a full year figure of 9.16p, again below Credit Suisse forecasts but up on the previous year's 8.82p. In fact, and judging by the fact that many observers seem to be calling attention to it, it would seem that many other analysts had also penciled in a higher dividend pay-out. In that regard, the company stated that, "(it is) prudent to grow the dividend at more modest levels, reflecting the impact of low yields (...) strongly placed to return to a higher level of dividend growth as market and economic conditions improve." RSA has most of its money in government and corporate bonds and saw a 19% increase in its investment result in 2011 to £642m. COMMENTS FROM MANAGEMENT Simon Lee, the Chief Executive Officer of RSA, said: "We have delivered a good result in difficult conditions given record natural catastrophe losses for the industry, the challenging economic environment and historically low yields." He added: "Profits ...improved significantly, with another strong contribution from International and the UK benefiting from both improved weather and management action." Lee (SNP: ^LEEY - news) forecasts the insurance market to remain tough through 2012 but predicted the combined operating ratio would be "better than 95%". Alongside the results issued today, RSA also announced the replacement for its Finance Director, George Culmer who will leave the firm in May to move to Lloyds. The new numbers man will be Richard Houghton who joins from Aspen Insurance Holdings, after stints at RBS (LSE: RBS.L - news) and Ulster Bank. Shares in RSA fell sharply at the open in London and were down 3% at 08:43. Over the last 12 months the stock has lost 22% of its value. BS