New RSA chief puts the brakes on dividend

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It's still going up - the final divi is increasing 2% to 5.82p - but the new man thinks the poor yields RSA is earning due to low interest rates means it will be "prudent to grow the dividend at more modest levels" in the future.

The stock market was alarmed at news it did not expect, however, and the insurer's shares were the biggest faller in the FTSE 100, down 4p at 108.4p.

Lee agrees with David Cameron that Britain is the "whiplash capital of Europe" with claims punishing insurers and honest policyholders.

"We thought the meeting last week with the Prime Minister was very positive," said Lee. "We are encouraged by the fact that the Government is looking for reform."

No-win, no-fee lawyers must be reined in and a higher burden of proof for whiplash must be introduced, reckons Lee, overseeing his first set of annual results since taking over from Andy Haste.

In 2011 premiums rose by 9% to £8.2 billion, while profits leapt 29% to £613 million. This may not suggest that insurers are having such a tough time of it, but Lee points out motor insurance is only 6% of RSA premiums.

Getting on for half of the company's business is now commercial, rather than home and car cover.
"We think we are reporting a good performance in pretty tricky conditions. Financially we are pretty resilient," he says.

A move to cut exposure to equities last summer - down from 9% to 5% of invested premiums - helped returns this time around. The investment arm made £642 million, up 19%.

Still, the overall results were rather poorer than the City was expecting.

What's more, the company's £100 million payout to cover disasters - floods and earthquakes - was much higher than analysts had factored in.

RSA is to get a new finance chief shortly. Richard Houghton, former chief financial officer of Aspen Insurance, will become the company's CFO in June replacing George Culmer, who leaves for Lloyds Banking Group in May.

RSA is seeking to expand in emerging markets such as Latin America and Asia to offset slower-growing regions such as the UK.