RSA sees thousands of storm and flood claims, but praises UK defences

Insurer RSA has said floods caused by the recent storms are likely to have an impact on its UK arm in the first quarter, but praised the success of flood defences in helping minimise damage.

Stephen Hester, chief executive of the More Than owner, said the group had received “several thousand” claims after recent Storms Ciara and Dennis and hundreds more for flood damage.

But he said Britain’s flood defences had “done a better job than in prior years”, with the flooding impact looking likely to be significantly less than seen in 2007 and 2015.

And while flood claims may knock its UK business in the first three months of 2020, RSA is not expecting a financial hit at group level.

Shares in the firm lifted 2% – bucking the trend of wider falls in the FTSE 100 Index amid another wave of the coronavirus sell-off – as RSA reported a 3% rise in pre-tax profits to £492 million for 2019.

But on an underlying basis, stripping out businesses it has exited since 2018, pre-tax profits soared 27% to £624 million last year and it cheered a record underwriting profit of £405 million.

Mr Hester said he was “pleased” with the results, which came after a tough 2018 when earnings were dragged sharply lower by weather-related costs and large losses in its commercial insurance business, particularly the London market unit.

RSA has since pulled out of several lines in its commercial insurance business, such as international freight and construction.

He said: “2019 was an important period for RSA.

“Significant management renewal and a repositioning of our UK & International division are showing good promise.”

But there is “plenty more we can do”, he added.

RSA said it was cutting annual costs in the UK business by another £50 million, which has led to job losses in the “low hundreds”, according to Mr Hester.

The UK business swung to a £50 million underlying underwriting profit in 2019, against losses of £93 million in 2018.

Including exited businesses, 2019 UK underwriting profits stood at £3 million, while UK net written premiums dropped 9% to £2.1 billion.