RSA Insurance – owner of the More Than brand – has reported a 14% drop in annual profits as snow ion the UK and floods and typhoons overseas pushed up claims more than £255 million than expected levels.
In the UK, severe cold weather led to thousands of burst pipe claims adding up to £110 million more than expected in the last to months of 2010 alone.
RSA has around a 6% home insurance market share in the UK. Despite soaring claims, the firm has posted pre-tax profits of £474 million for 2010, down from £554 million in 2009.
The company says results in the UK were disappointing while losing £95 million in underwriting losses against £75 million profits in 2009 even though premiums were increased.
RSA UK chief executive Adrian Brown has predicted continued double-digit rate increases in motor, and household increases towards double digits, in 2011.
He warned household and motor insurance premiums still face increases despite a 19% rise in motor rates and a 5% hike in household policy prices.
“The household market is underpriced by three, four, five per cent and may be this sort of event will cause rates to rise closer to double digit rather than low single digit. The weather event can be used as an excuse, but really that’s about having the right long term pricing strategy,” said Mr Brown.
The total insurance premium take in the UK for RSA in 2010 added up to £2.9 billion.
The combined operating ratio (COR) – an insurance industry measure of claims and costs as a percentage of premiums – hit 102.2% in the UK. Figures below 100% are regarded as profits.
Looking forward, RSA Group expects to perform better in the UK this year, providing the weather improves.