Insurer faces up to £65m claims bill from St Jude, but UK claims were ‘relatively limited’
RSA now expects a group return on equity (ROE) of less than 10% in 2013 as a result of storm losses.
The company also said in an interim management statement this morning that it was continuing to make progress on turning around its UK commercial book.
RSA is expecting claims of between £45m and £65m from the storm that hit southern England and northern Europe on 27 and 28 October.
The company has also taken a combined hit of £83m from extreme weather events in Canada in June and July, and adverse weather continued to hit the country in the third quarter.
However, it added that it is expecting limited claims from the UK portion of the October storms.
The interim management statement said: “The majority of the UK was affected by peak wind speeds of 60mph or less, with the most extreme conditions apparent in relatively unpopulated areas. Less severe rainfall and the short duration of the storm in the UK mean that, to date, there have been relatively limited claims.”
UK commercial ‘progress’
RSA reported that UK net written premium (NWP) increased 3% to £2.3bn in the first nine months of 2013 from £2.2bn in the same period last year.
This was driven by growth in commercial lines, where NWP was up 6% to £1.3bn (first nine months of 2012: £1.2bn).
The company said: “We are continuing to work hard to refocus our UK commercial business and we are making good progress.”
The biggest rise was in commercial motor, where NWP increased 13% to £472m from £416m.
However, this was driven by price increases on the loss-making commercial motor contract with car lease firm Motability and the company is expecting commercial motor NWP to drop following the restructuring of the Motability contract on 1 October.
Under the new arrangement, RSA will write 20% of the Motability scheme, and so expects premium levels to fall from around £400m a year to £350 in 2013 as a whole, before falling “significantly” in 2014.
Excluding Motability, commercial motor NWP was down 8% because of “targeted reductions”.
Commercial property NWP was flat at £358m, with rate increases offset by “targeted volume reductions”.
Commercial liability NWP was down 1% to £199m from £201m, which the company said was down to maintaining discipline and focus on current year profitability in a challenging market.
Personal lines dip
Personal lines NWP dropped 1% to £993m from £1bn.
Personal household NWP grew by 4% because of new deals in the company’s affinity and broker channels.
Pet NWP was down 4% because of premium adjustments.
Motor was down 6% driven by lower volumes as the company continues to “follow our strategy of prioritising profit over volume”.