Earthquake fails to crack insurer growth

GENERAL insurer RSA yesterday posted "strong growth" for the first three months of the year as it overcame the impact of an earthquake and heavy snow.

The UK-based firm – Chile's biggest insurer – took a 30 million hit on the earthquake that struck the country in February and an 80m blow from the severe winter weather endured by the UK, Ireland and Scandinavia.

But the group added that it had seen "good momentum" with overall net written premiums up 5 per cent to 1.9 billion during the quarter.

In the UK, RSA also enjoyed 7 per cent premium growth as the insurer saw strong new business levels – including 11 per cent expansion in pet insurance over the period.

The firm was boosted by a deal with supermarket giant Tesco, which will see the insurer provide cover for 700,000 pets.

Despite the extra claims, RSA still expects its combined operating ratio – the share of premiums it pays out in claims and running costs – to be 95 per cent this year.

The group – which has withdrawn from some UK markets to focus on those which offer better returns – said the Tesco deal was expected to deliver premiums of about 100m within the first year, creating 230 jobs.

Chief executive Andy Haste said the company – celebrating its 300th birthday this year – was looking forward to the future "with confidence".

It expects the UK to remain in growth territory this year, with a "mid-single digit" improvement from its international arm as well as a stronger double-digit advance from its emerging markets business.

Panmure Gordon insurance analyst Barrie Cornes said that RSA holding its 95 per cent guidance on operating ratios was "particularly positive" given the bigger-than-expected losses from the weather.

He added: "The shares have been impacted by the wider fall in the investment market together with a general malaise towards the non-life insurance sector a whole.

"This is both unfortunate and unwarranted given the consistently good performance of RSA led by competent management."