Company cuts COR target as it also reveals £35m of Italian earthquake losses
RSA has estimated that claims from the recent wet weather in the UK will cost it £50m.
The insurer put the bill from the wet weather in June at £40m across its UK household, motor and commercial property portfolios.
It added that it currently expected the continuing rainfall in July to cost it an additional £10m.
RSA also revealed it had incurred £35m of losses from the two earthquakes that hit the Emilia-Romagna region of Italy in May.
As a result of the losses, and assuming a more normal level of weather losses in the second half of 2012, RSA expects its full-year, group-level combined ratio to be better than 96% for the full year. The company had originally forecast a combined ratio of better than 95%.
Shore Capital analyst Eamonn Flanagan said in a research note: “In our view, these losses should be viewed as unfortunate but ‘par for the course’ for a worldwide insurer such as RSA.”
He added: “We suspect that the UK losses should encourage further rate improvement in the property accounts. Therefore any weakness in the share price this morning should be viewed, to us, as an excellent buying opportunity.”
Panmure Gordon analyst Barrie Cornes said RSA’s first-half weather bill was “significantly more than we had forecast”.
However, he added: “At least the announcement has cleared the way for an interim results announcement with no nasty shocks.”
Shore Capital has a ‘buy’ recommendation on RSA’s shares, while Panmure Gordon rates them as ‘hold’.
No comments yet