Yesterday’s update from RSA did much to explain why the erstwhile Royal & SunAlliance is the best-performing share among Europe’s large-cap insurers this year.

Net written premiums were up by 11 per cent in the nine months to September 30, aided by strong growth in Canada, in Scandinavia and in RSA’s spread of emerging markets. Premium rates show signs of improving, up from 3.7 per cent to 4.5 per cent on the quarter on a weighted-average basis. The company remains on track to meet its key measure of profitability in 2008 – a combined operating ratio of 95 per cent or less.

Even better, the financial turmoil of the past two months appears to have left both RSA’s balance sheet and its investment portfolio unscathed. The company’s surplus of regulatory capital has actually increased since the end of June, by £100 million to £1.5 billion. So, too, has the value of its bond portfolio, more than half of which is invested in government securities.

That resilience can be attributed to the vigorous clean-up of RSA’s assets and underwriting policies after its rescue rights issue five years ago. As Andy Haste, the chief executive brought in to turn RSA around, observed yesterday: “One near-death experience is quite enough.”

That means that RSA has long since jettisoned the sort of higher-risk corporate bonds that have since hurt its peers, refocused its portfolio away from equities, and pulled out of areas of underwriting that are more sensitive to economic downturn, such as payment protection and residual value insurance.

In the meantime, it has steadily diversified outside a now-flat UK market, so that 60 per cent of its profits come from overseas (which also means that it is benefiting from sterling’s depreciation), and it has mitigated the effect of domestic weakness by refusing to pursue volume at the expense of profitability. So far this year, it has turned down £195 million of new business and declined to quote for a further £160 million.

The upshot is that RSA has greater predictability of earnings than its peers, and is free of fear of a capital raising or a dividend cut (it yields a secure 5.4 per cent) – for which the stock market has duly rewarded it.

The sole concern must arise from falling interest rates. That concern is that with 77 per cent of its holdings in bonds, and with yields falling, it will become steadily harder for RSA to replicate past investment returns – and hence earnings – as its portfolio matures. Coupled with RSA’s hefty outpacing of the FTSE all-share index (44 per cent year-on-year) and the valuation premium to its peers, the current 143¾p is a good point to take profits.

International Power

For those who consider electricity generators to be safe-haven investments, International Power (IP) is there to prove otherwise.

Shares in the £4 billion company halved during October, hurt by investors’ aversion to stocks with high financial gearing (IP has net debt of about £5.3 billion), fears that tighter debt markets would make project financing for new power stations harder to procure, and falling oil prices, which imply lower electricity prices and reduced profits from IP’s sizeable US operations.

So yesterday’s upbeat trading update went some way towards steadying the shares. Analysts raised forecasts after IP reassured that profits this year would be higher than last. Its UK business has been helped by higher short-term electricity prices, on which its Deeside and First Hydro plants have been able to capitalise; last month’s fire at its gas-fired station in Sicily will not hurt 2009 profits; and its corporate tax rate will be lower than expected. Confirmation that IP is being paid the cash owed by its state-backed customer in Pakistan and that it has to refinance only £60 million of debt next year also gave comfort.

But none of that resolves the stock market’s essential difficulty with IP: that it is a complex business with 45 power stations in 20 countries, many of whose markets have their own dynamics. However, IP owns 33,000 megawatts of generating capacity in a world that remains structurally short of power, with half its profits tied to long-term contracts. At 263½p, up 7¼p, or seven times 2009 earnings, those unfazed by volatility should buy on weakness.

Sportech

When Sportech cornered the football pools market last year by adding Vernons to its existing Littlewoods and Zetters businesses, most people assumed it was a move to improve profits by cutting costs rather than a serious attempt to restore to growth an apparently moribund leisure pursuit.

Ian Penrose, the Sportech chief executive, thought differently. Sure, he has extracted synergies but he has also invested heavily in merging the three pools operations into a single business and relaunching them as The New Football Pools. The trading update yesterday was the first opportunity since the new football season began to monitor progress.

The results are encouraging. For the first time since the launch of the National Lottery in 1994, an event that threatened to destroy the industry, the number of players has increased. In the first three months, player numbers have risen by 1 per cent, which, in the context of the annual decline of 16 per cent seen previously, is astonishing.

It is early days, and the full-year is still likely to see an 8 per cent decline, but with new distribution channels coming on stream all the time – both online, with 888.com, and through Ladbrokes betting shops – the omens look good. Yesterday’s £600,000 purchase of a football community website provides useful cross-selling opportunities. Some one-off costs mean full-year forecasts have been trimmed, but the shares, up ¾p at 51p, are trading at only 4.4 times full-year earnings. Hold.

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