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RSA Ins Grp UK Regulatory Announcement: Annual Financial Report | Business Wire

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<p>LONDON–(BUSINESS WIRE)–.

25 March 2014

RSA INSURANCE GROUP PLC

(THE “COMPANY”)

2013 ANNUAL REPORT AND NOTICE OF ANNUAL GENERAL MEETING 2014

In accordance with Listing Rule 9.6 and Disclosure and Transparency Rule

(“DTR”) 4.1, the Company announces that the following documents have

been posted to shareholders and have today been submitted to the UK

Listing Authority via the National Storage Mechanism:

  • Annual Report and Accounts for the year ended 31 December 2013

  • Notice of the 2014 Annual General Meeting to be held on 9 May 2014

  • Proxy form for the 2014 Annual General Meeting

The above mentioned documents (except for the Proxy form) are available

on our website at www.rsagroup.com/ar2013

and www.rsagroup.com/agm2014

and will shortly be made available for inspection at www.hemscott.com/nsm.do.

Shareholders can obtain additional copies of the Proxy form from our

Registrar, Equiniti Limited at Aspect House, Spencer Road, Lancing, West

Sussex BN99 6DA or view online at www.shareview.co.uk.

The Notice of the 2014 Annual General Meeting includes resolutions to

approve a sub-division and consolidation of the Company’s ordinary

shares. Details on the proposed sub-division and consolidation are set

out in full in the Notice of the 2014 Annual General Meeting available

on our website at www.rsagroup.com/agm2014.

The Notice of the 2014 Annual General Meeting includes a resolution to

amend the articles of association of the Company in relation to the

proposed sub-division and consolidation mentioned above. The draft

amendment is set out in full in the Notice of the 2014 Annual General

Meeting available on our website at www.rsagroup.com/agm2014.

This announcement should be read in conjunction with the Company’s

announcement issued on 27 February 2014. Together these constitute the

material required by DTR 6.3 to be communicated to the media in full

unedited text through a Regulatory Information Service. This material is

not a substitute for reading the Company’s 2013 Annual Report and

Accounts.

An indication of the important events that occurred in 2013 and their

impact on the condensed consolidated financial statements, the condensed

consolidated financial statements themselves and the responsibility

statement were announced to the London Stock Exchange on 27 February

2014, forming part of the Preliminary Results announcement for the year

ended 31 December 2013. Additional content forming part of the

management report is in the Appendix below.

Enquiries:

John Mills

Deputy Group Company Secretary

RSA Insurance Group plc

Tel: +44 (0) 20 7111 7000

IMPORTANT DISCLAIMER

Visit www.rsagroup.com

for more information.

This press release (together with the Annual Report and Accounts

referred to herein) has been prepared in accordance with the

requirements of English company law and the liabilities of the directors

in connection with this press release (together with the Annual Report

and Accounts referred to herein) shall be subject to the limitations and

restrictions provided by such law. This press release may contain

‘forward-looking statements’ with respect to certain of the Group’s

plans and its current goals and expectations relating to its future

financial condition, performance, results, strategic initiatives and

objectives. Generally, words such as “may”, “could”, “will”, “expect”,

“intend”, “estimate”, “anticipate”, “aim”, “outlook”, “believe”, “plan”,

“seek”, “continue” or similar expressions identify forward-looking

statements. These forward-looking statements aren't guarantees of

future performance. By their nature, all forward-looking statements

involve risk and uncertainty because they relate to future events and

circumstances which are beyond the Group’s control, including amongst

other things, UK domestic and global economic business conditions,

market-related risks such as fluctuations in interest rates and exchange

rates, the policies and actions of regulatory authorities (including

changes related to capital and solvency requirements), the impact of

competition, inflation, deflation, the timing impact and other

uncertainties of future acquisitions or combinations within relevant

industries, as well as the impact of tax and other legislation or

regulations in the jurisdictions in which the Group and its affiliates

operate. As a result, the Group’s actual future financial condition,

performance and results may differ materially from the plans, goals and

expectations set forth in the Group’s forward-looking statements. The

Group undertakes no obligation to update any forward-looking statements,

save in respect of any requirement under applicable law or regulation.

Nothing in this press release (together with the Annual Report and

Accounts referred to herein) should be construed as a profit forecast.

APPENDIX

References to page numbers and notes to the accounts made in this

Appendix refer to page numbers and notes to the accounts in the 2013

Annual Report and Accounts.

RISK REVIEW

THE FUTURE SUCCESS OF THE GROUP IS UNDERPINNED BY OUR CONSERVATIVE RISK

PROFILE AND CLEAR RISK APPETITE.

RISK MANAGEMENT APPROACH

We take a broad view of the scope of risk management which is taken to

include the risk of underperformance as well as adverse events and the

failure of processes. This approach is reflected in our risk appetite

statement and key risk indicators which cover all aspects of our

strategic objectives. The risk appetite Statement is updated annually in

line with the strategic review. Our risk management system is defined in

a comprehensive suite of risk management policies, supported by detailed

procedures. A central task of the risk management function is to monitor

adherence to these policies and procedures. The Board is closely

involved in risk management via the Board Risk Committee which meets

quarterly. The quarterly risk reports monitor the status of all risks

and will form an integral part of our ORSA process.

Principles

Simple objectives

• Create value for all stakeholders

• Focus on general insurance in our selected markets

• Commitment to sustainable, profitable performance.

Clear risk appetite

• Underwriting and operating excellence

• Strong control environment

• Tight financial management

• Protecting and managing the Group’s reputation.

Robust governance, control and reporting

• Comprehensive policies, procedures and controls

• Clear delegation of authorities

• Robust lines of defence

• Regular and relevant reporting and assurance processes.

Strong culture

• Board set ‘tone from the top’ of open communication and engagement

• Putting the customer at the center of what we do

• High quality and engaged staff.

OUR RISK MANAGEMENT IN PRACTICE

Rigorous review of RSA’s planning process:

The Group and regional Risk functions subjected the Operational Planning

process to significant independent challenge, especially given the

Group’s reduced capital strength and the importance of aligning

strategic decisions with appropriate earnings expectations. This

involved early and continual engagement, objective analysis (both

top-down and portfolio level bottom-up), trend and peer comparisons.

cross-checking with other risk inputs. The result is increased

confidence given to the Board in the robustness of the revised Plans.

Monitoring capital:

The Risk function and Board Risk Committee devoted significant time to

capital during 2013, developing and approving an enhanced risk appetite

to set out more consistently and explicitly the target range and buffers

for each principal capital measure. This was calibrated against standard

stress tests, reputational risk assessment and model risks. The

Committee oversaw a reduction in risk appetite during the year to

reflect the reducing capital buffers: equity exposures were reduced,

additional reinsurance protection was purchased, M&A activity was halted

and capital action plans were launched.

Our strategic risk profile is our forward-looking assessment of the

principal risks to delivering our strategy. Toward the end of 2013 we

launched our business review. We're adjusting our strategy. As a

result, as in any time of change, a key risk for us to manage is the

alignment of our strategy, execution and impact on financial performance

with the expectations of our shareholders. As part of the management of

this risk, the Risk function conducted an independent, end-to-end

challenge of our business planning process which supports its robustness

and our confidence in the future.

The interrelated risks of adverse financial markets (including low

yields) and low capital generation remained the greatest strategic risks

during 2013. We've enhanced our capital risk appetite and capital

strategy as the basis for ranking the options for improving capital

strength and returns. In addition, we made targeted reductions in our

risk appetite and risk profile during 2013.

There is evidence that regulators may, in the light of the introduction

of Solvency II, seek to enforce greater restrictions on the fungibility

of capital, in other words, whether the capital we hold across our

businesses is accessible to support the risk profile over appropriate

time-frames. As an internationally diversified group, we continue to

monitor this risk carefully in dialog with our regulators. To

manage the internal capital flows between our entities effectively.

Risk

 

Description and impact

 

How we manage

 

Change in

likelihood in year

Low capital

generation

Insufficient capital generation over medium-term to support dividend

and

corporate activity

• Accelerated delivery of UK strategy

• Delivery of other regions’ operational

plans

• M&A moratorium and additional reinsurance protection

• ALM and cashflow risk management

• Capital strategy project to rank options

Up

Adverse financial markets

Impact of negative long-term macroeconomic trends, financial market

volatility and/or persistently adverse

yield environment

• Geographic diversification

• High quality, low risk investment strategy

and portfolio

• Tactical actions to mitigate reduction in yields

• Defensive positioning to Eurozone

Constant

Imposition of

fungibility

restrictions

Limited fungibility of capital following

tighter regulatory measures

• Rigorous legal entity solvency management

• Internal dividend policy

• Regulatory dialog

Up

IT age and

complexity

limits agility

IT stability or agility limitations impair service levels or

delivery of strategic change due to cost and management capacity.

Constraints include risk of disruption, age and complexity of legacy

estate and competing priorities

• IT Change stack oversight to track delivery of project and benefits

• Development and funding of dedicated e-business capability

• New Group CIO with remit to develop long-term strategic approach

• IT Risk framework developed to improve oversight and governance

Constant

Misaligned

strategy and

earnings

expectations

Failure to align strategy, execution

and financial performance with

shareholder expectations

• Robust strategic and operational planning processes

• Delivery of operational plans

• Robust management of underperforming businesses

• Management of corporate governance requirements

• Investor and media relations

Up

Systemic

process

failure

Systemic failure in pricing, underwriting

and claims processes

• Granular MI on rating and claims trends

• Underwriting strategy statements, license and controls

• Refined portfolio classification and pricing tools

• Q uarterly Business Reviews and BRC governance

• Accumulation management and large loss review actions

Constant

Technical staff

retention and

development

Failure to attract and retain key staff for specialist technical

roles

• Talent boards and Engagement programme

• Review of remuneration system

• Robust succession planning

Up

Product range

obsolescence

Failure to develop and distribute appropriate and/or innovative

products to existing/new customers and new channels

• Group Architecture and IS Strategy

• E-enablement initiatives

• Customer Engagement programme

Constant

Reinsurance

failure

Failure of reinsurance programme to deliver planned benefits through

e.g. counterparty failure, operational error or failed recovery

processes

• Board, Exco and BRC governance

• Reinsurance recovery processes

• Group-wide reinsurance placement management

• Reinsurance Security controls and processes

Constant

Misaligned

culture and

brand

Failure to create a culture and brand that supports Group Strategy

and will attract and retain diverse individuals in an environment

that can harness their unique contributions

• Develop articulation of desired culture

• Design indicators to assess cultural risks and enable audit

• Global Diversity and Inclusion (D&I) programme underway

• People and Leader Expectations in development for Brand refresh

Up

Misaligned

reward

structure

Failure of reward systems to align with corporate aspirations and

external

stakeholder expectations

• Remuneration committee governance

• Review of remuneration system

• Investor and media relations

Down

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