RSA announces the impact of the adverse weather in November and December 2010 to be around £142m more than normal levels and for the full year to be around £255m, or 3.5 points on the COR, more than normal. Compared with the prior year, the total impact of weather across the Group is expected to be around £175m worse or approximately 2.4 points on the COR.
RSA expects its full year 2010 results to show net written premium growth of 11%, a COR of between 96.5% and 97.0% and an operating profit in the range of £600m to £630m. Given the extreme weather in 2010, this is a strong result and reflects the diversity of the portfolio and the resilience of the Group’s underlying profitability.
RSA remains committed to sustainable profitable performance and in 2011, as it stands today and assuming a return to more normalised weather, expects to deliver continued premium growth, a combined operating ratio of better than 95%, investment income of around £550m and total investment gains of around £50m.
The Group’s dividend policy is to increase the dividend at least in line with inflation and the adverse weather in 2010 will not impact this policy.
Andy Haste, Group CEO of RSA, commented:
“This is a strong result in what has been an extremely tough year for the industry, including the European freeze and Chilean earthquake in the first quarter and the coldest December in the UK for 100 years. To deliver a COR of between 96.5% and 97% in these conditions underlines the strength and resilience of our portfolio. We look forward to 2011 with confidence and, as our guidance today shows, expect to deliver continued premium growth and strong profitability.”
Winter Weather Update
Across the Group, the impact of adverse weather in November and December 2010 is around £142m more than normal levels, of which £110m is in the UK, £17m across Scandinavia, £7m from Ireland, £6m in Emerging Markets, mainly due to Hurricane Tomas and £2m in Italy.
In the UK, around £72m of the adverse experience relates to Household, where we have a market share of around 6%, with a further £26m in Commercial Property and £12m across Motor and other classes.
In Household, we have experienced a significant increase in claims relating to burst water pipes with around 8,000 claims at an average cost of approximately £6,700 received since 1 November, with volumes peaking in the weeks around Christmas, as well as an increase in claims from Household schemes. In addition, we have received almost 19,000 home emergency claims, around 5,500 snow claims and almost 5,700 other weather related claims. Our UK call centres handled around 90% more calls than normal in December and to date, we have received over 82,000 more calls than usual.
In Commercial Property, we have experienced over 2,300 claims, with around 15 claims accounting for approximately 23% of the adverse impact and the remainder being smaller losses.
Across the Motor book, in the period from 26th November to 24th December we experienced around a 70% increase in single vehicle accidents and around 20% more accidental damage claims compared with early November.
In Scandinavia, December was reported to be the second coldest ever recorded in Denmark and the coldest since 1915 in Stockholm. The impact of this freeze is around £17m more than normal levels, with the cost spread evenly across Personal and Commercial lines driven by an increase in burst water pipes and motor claims.
The impact from Ireland is around £7m more than normal levels, with the cost again driven by burst water pipes as the country experienced the coldest December on record.
Across the Group, our customers remain our key focus and we mobilised additional resources to ensure they received a prompt response, with claims dealt with as quickly as possible.
Source : RSA Press Release
