RSA in shock profit warning
Insurer’s UK business reports £70m underwriting loss as COR worsens to 110%.
RSA Insurance has warned that its UK underwriting business has suffered a loss of £70m in the third quarter of 2018.
The combined operating ratio for the UK and London market business deteriorated to 110%, with the insurer’s marine portfolio taking the largest hit.
In an unscheduled update to the London Stock Exchange today (28 September), RSA stated that the results were driven by an increase in weather-related claims.
RSA shares were down 9.2% in early trading.
Stephen Hester, chief executive officer of RSA, said: “Our UK and ‘London market’ business reported an underwriting loss which is disappointing.
“Actions to improve in the UK are well underway and we are determined to restore satisfactory performance whilst continuing our progress internationally.”
He added: ”RSA’s international businesses performed well in Q3, making strong progress against our best-in-class ambitions.”
“Bit of a blow”
Barrie Cornes, equity research analyst at Panmure Gordon, noted that the profit warning was a “bit of a blow” and expected RSA’s shares to be “under pressure” today.
He commented: “RSA is a well-run business and non-life insurers will of course be subject to large weather losses from time to time.
“Although the share price has come off Summer highs where we viewed them as being priced for perfection, we still think that they are fully valued.”