RSA Insurance Group Plc tumbled after the U.K.’s biggest non-life insurer by market value said it will miss its profitability target in the wake of last week’s European windstorms.
Wind damage in Europe and continued adverse weather in Canada will push return on equity below 10 percent for the year, compared with a previous target range in August of 10-12 percent, London-based RSA said in a statement Tuesday.
RSA, which insures cars and homes in the U.K., the Nordic countries and emerging markets, slid as much as 8.2 percent—the most since Feb. 20. It fell 6.3 percent to 121 pence at the close in London, giving the company a market value of 4.4 billion pounds ($7.1 billion). Windstorm Christian, also called the St. Jude’s Day Storm in the U.K., battered homes and felled trees from England to the Baltic Sea last week.
“2013 is proving to be an exceptionally tough year for weather events,” Chief Executive Officer Simon Lee said in the statement.
RSA estimated the windstorms will result in losses of as much as 65 million pounds, mostly in Scandinavia, where Christian generated the highest wind speeds ever recorded in Denmark. Willis Re said on Nov. 4 that the storm’s damage may cost insurers as much as 1.3 billion euros ($1.8 billion).
Adverse weather losses will be about 1.5 percentage points above the company’s planning assumption if there are no more major events, RSA said. The windstorms follow flooding in Canada that included the country’s worst natural catastrophe on record in June in Alberta and the third-worst on record in July in Toronto, which resulted in a combined loss of 83 million pounds.
The insurer also said today that nine-month net written premiums rose 7 percent to 6.7 billion pounds. The company said its medium-term guidance remains unchanged and its investment income is “comfortably on track” to reach about 470 million pounds.
(Editors: Keith Campbell, Steve Bailey)