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Bad weather hits insurer RSA first-half operating profit

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Bad weather hits insurer RSA first-half operating profit

Bad weather hits insurer RSA first-half operating profit
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TOBY MELVILLE(Reuters)
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By Carolyn Cohn

LONDON (Reuters) - Insurer RSA <RSA.L> posted a 15 percent drop in first-half operating profit to 304 million pounds on Thursday, hit by bad weather conditions, particularly in Canada.

The operating profit was in line with a forecast 303 million pounds, according to a company-supplied consensus forecast.

General insurer RSA, best known in Britain for its More Than brand, also has major businesses in Canada, Ireland and Scandinavia. It offers motor, home and pet policies, as well as commercial insurance.

A particularly cold winter in Canada, a heavy Canadian windstorm in May and Britain's Storm Emma were among weather conditions to impact RSA's earnings, Chief Executive Stephen Hester told a media call.

The Canadian bad weather caused more motor accidents, Hester said

"Weather is a random walk, we have no reason to believe the second half will be worse than normal," he said.

Rival Aviva <AV.L> also said on Thursday weather conditions hit its first-half results.

RSA's net written premiums dropped 5 percent to 3.2 billion pounds in constant currency terms, below a forecast 3.4 billion pounds, and underwriting profit fell 23 percent to 171 million pounds.

"The miss in underwriting profit is not ideal but it does not look to be anything that will have a longer term impact," Paul De'Ath, analyst at Shore Capital, said in a note.

The company also said it has signed an insurance distribution, or bancassurance, deal with Canada's Scotiabank.

Political uncertainty could weigh on RSA and other insurers' investment income due to the impact on foreign exchange and interest rates, Hester, a former boss of RBS, said.

"World trade wars, any geopolitical risks that come out of debates with Iran, or it could be a hard, or soft or no-Brexit deal, have the risk of moving markets significantly."

RSA said it would pay an interim dividend of 7.3 pence per share, in line with forecasts and up 11 percent.

RSA's shares fell 1.03 percent to 635 pence per share at 0702 GMT, compared with an 0.5 percent fall in the FTSE 100 index <.FTSE>.

(Reporting by Carolyn Cohn, editing by Sinead Cruise and Angus MacSwan)

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