Promising investors a stronger 2011, U.K. insurer RSA Insurance Group PLC said Thursday its full-year operating profit was affected by heavier-than-usual claims from harsh winter conditions.
The insurer, which last year was rebuffed in a £5 billion ($7.99 billion) bid for parts of Aviva PLC's general-insurance business, said full-year operating profit would be down by between 19% and 23% from a year earlier. It said the figure would be in the range of £600 million to £630 million, compared with £777 million in 2009.
The forecast was significantly below estimates, putting pressure on RSA's shares in early European trade Thursday.
Bad-weather losses in November and December were around £142 million higher than usual, while over the full year, the weather impact was about £255 million more than normal levels, the company said.
"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 U.K. for 100 years," Chief Executive Andy Haste said.
The company said that for 2011, assuming a return to more normal weather conditions, it should continue to grow premiums and expects a combined operating ratio of better than 95%, investment income of around £550 million and total investment gains of around £50 million.
"We look forward to 2011 with confidence and, as our guidance today shows, expect to deliver continued premium growth and strong profitability," Mr. Haste said