RSA's results take a blow from adverse weather costs

Company suffers in both group operating profit and underwriting profit

RSA's results take a blow from adverse weather costs

Insurance News

By Terry Gangcuangco

Largely thanks to adverse weather, RSA saw declines in both its group operating profit and underwriting profit for the first half of 2018.

From £222 million (around SG$396.8 million) in the same period last year, underwriting profit fell 23% to £171 million (around SG$305.6 million). Group operating profit of £304 million (around SG$543.3 million), meanwhile, represents a 15% slide from 2017’s £360 million (around SG$643.4 million).

The insurer attributed the drop to adverse weather, which it said was £53 million in excess of the five-year average.

“First half underwriting results were below our ambitions due to adverse weather costs,” commented RSA group chief executive Stephen Hester when the firm announced its half-year figures this morning. “On an underlying basis we showed areas of excellent performance however, and with much we can continue to improve.”

Here are the numbers, per region:

Operating profit

  • Scandinavia – £147 million, down 25%

  • Canada – £25 million, down from £68 million

  • UK & International – £144 million, up 33%

Underwriting profit  

  • Scandinavia – £112 million

  • Canada – loss of £4 million

  • UK & International – £72 million

Combined ratio

  • Scandinavia – 87.6%

  • Canada – 100.5%

  • UK & International – 95.3% 

“Weather was the dominant feature of the first half and the comparison is further distorted by a benign H1 2017,” noted the insurer in its results announcement. “Group weather costs were £155 million or 4.9% of net earned premiums. Canada was the most affected region with a weather ratio of 10%, twice the annual five-year average.

“In particular, at a cost to the industry of more than $500 million, the windstorm of early May is likely to be the most costly insured event in Ontario and Quebec since the 2013 Toronto floods. The UK & Ireland saw Storms Eleanor and Emma, with Emma known locally as the ‘Beast from the East’ and costing an estimated £47 million pre-tax.”

Meanwhile RSA, which posted a group combined ratio of 94.7%, reported a 12% increase in pre-tax profit to £296 million, as well as a 19% climb to £245 million in statutory profit after tax.





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