Bad weather in Q1 impacts first quarter profit
RSA said its underlying first quarter profits were hit by bad winter weather in the UK and abroad, including the Beast from the East.
Though headline pretax profits were higher than a year ago, underlying profits were lower due to elevated winter weather costs, which were not fully offset by other improvements in the business, the company said in a trading statement.
No profit numbers were released.
Group weather costs were 5.1% of net earned premiums, up 3.1 percentage points from a year earlier, and 1.9 percentage points higher than the five-year average for the first quarter of 3.2%. Poor weather in Canada continued into April, RSA said.
The large loss ratio improved to 9.7%, trending closer to the 5 year average of 9.0%, while the attritional loss ratio improved slightly versus the first quarter last year.
Gross written premiums rose 1% at constant currency rates and were in line with a yeaer earlier at reported rates, RSA said.
Net written premiums of £1.517bn were up 2% on an underlying basis.
However, the company said, at a headline level, reinsurance costs, a reduction in retention levels for certain programmes and rate inflation in reinsurance areas such as UK motor dampened net written premiums by £197m.
“We are happy with RSA’s progress at this early stage of the year,” said chief executive Stephen Hester.
“The underlying business is tracking consistent with our ambitions overall, whilst winter weather volatility is a normal part of our business. Headline profits are also strongly up, reflecting the absence (as planned) of restructuring costs.”
Hester said market trends are largely unchanged versus 2017. Market pricing remains subdued overall, except in portfolios responding to industry losses.
The stronger pound and a weaker Swedish krona “are a headwind in nominal terms for RSA versus the prior year”, with an impact of 2% in the first quarter, the company said.