Insurer RSA’s Profit Down On Floods, Quakes

RSA, Britain’s biggest commercial insurer, said its first-half profit fell by almost a quarter after heavy flooding in Britain and earthquakes in Italy triggered a surge of claims.

RSA, best known in Britain for its More Than home and motor insurance business, made an operating profit of 316 million pounds ($492.60 million) in the first six months of 2012, down 23 percent compared with a year earlier, it said on Thursday.

Analysts had expected a profit of 297 million pounds, according to a company poll.

The decline was driven by an estimated 40 million pound loss related to Britain’s floods, and a further 35 million pound hit from earthquakes that struck Italy’s Emilia Romagna region in May.

“Economic conditions will undoubtedly remain tough in some of our markets,” Chief Executive Simon Lee said in a statement.

“Despite this we remain confident of delivering a good performance for the full year.”

RSA’s combined operating ratio – costs and claims as a percentage of revenues, a key profit indicator – will be lower than 96 percent over the year as a whole, compared with 95.2 percent in the first half.

The company is paying a dividend of 3.4 pence, an increase of 2 percent.

RSA shares closed at 110 pence on Wednesday, valuing the company at about 3.9 billion pounds. The stock is up 5 percent since the start of the year, lagging a 14 percent increase in the FTSE non-life insurance index

Reuters