* Personal lines drive operating profit rise
* Car crash compensation changes to cost 14-15 million pounds
* RSA shares add 3% (Recasts with company reviewing its commercial business, adds background, analyst, shares)
By Lena Masri and Carolyn Cohn
LONDON, Aug 1 (Reuters) - British insurer RSA said it was reviewing its London commercial business and could exit if it stops making money after the group as a whole eked out a 1% rise in operating profit in the first half.
The home, motor and commercial insurer warned last year about the poor performance of its London-based international commercial insurance business and pulled out of several lines, including international freight and construction.
“The remaining business that we have there...will stay under careful review,” RSA Chief Executive Stephen Hester told a media call, adding it had been profitable in the first half.
If profitability deteriorated, “we would revisit our remaining presence”, he added.
Peel Hunt analysts reiterated their “Buy” rating on the stock, saying that “RSA’s main catalyst is its ability to turn around the commercial lines business ... and possibly carve out the unit as a separate business within the group.”
At 0910 GMT, RSA’s shares rose 3% to 576.8 pence, one of the best performers in the FTSE 100.
Commercial lines refer to products and services for businesses of any size and RSA’s London operation will include insurance for big risks in areas such as marine and energy.
Best known in Britain for its More Than brand, RSA also has major businesses in Canada, Ireland and Scandinavia.
Its operating profit excluding exits from the commercial business rose to 308 million pounds ($373 million), driven by performance in its personal lines business. That compared with 304 million pounds a year earlier and a company-supplied analyst forecast of 306 million pounds.
However, once exits were factored in, operating profit fell to 280 million pounds.
RSA’s group combined ratio, a measure of underwriting profitability, in which a figure below 100% indicates a profit, improved slightly to 94.3% from 94.7%, with personal lines such as home and motor outperforming commercial business.
Hester said the company would take a hit of 14-15 million pounds for the recent change in the Ogden rate, which requires insurers in Britain to set aside more money than they expected to compensate the victims of serious car crashes.
Britain’s largest motor insurer Direct Line this week reported a 10% fall in first-half profit, in part due to the Ogden rate change.
RSA said it would pay an interim dividend of 7.5 pence per share, from last year’s 7.3 pence.
$1 = 0.8249 pounds Reporting by Lena Masri and Carolyn Cohn Editing by Keith Weir