RSA hit with £76m bill from winter storms damage

More Than owner RSA Insurance said the damage caused by a series of storms that raged across the UK in December has cost it £76 million.

Storm Frank caused heavy flooding across many areas, including Aberfeldy in Perthshire. Picture: Catriona Webster/PA Wire

The group said flooding and other weather-related losses caused by storms Eva, Desmond and Frank ranging from Lancashire to central Scotland were “worse than planned”.

The Met Office said the storms around the Christmas period made last December one of the wettest on record.

But overall the group said its operating profit beat forecasts, jumping 43 per cent to £523 million in the 12 months to the end of December, in a busy year in which it saw off a takeover attempt from Swiss rival Zurich and sell off more than £1 billion of non-core businesses.

The group hired former Royal Bank of Scotland boss Stephen Hester in February 2014 to revive its fortunes after it was rocked by a series of profit warnings.

Hester said the group’s cost-saving programme was ahead of schedule, and he was increasing the target from £250m – which he expects to hit this year – to £350m by 2018.

In September, RSA fought saw off what Hester called the “distraction” of an unsolicited £5.6bn bid from Zurich, which fell apart after a slump at the Swiss group’s general insurance business prompted it to abandon the deal.

RSA said: “We believe strongly that RSA can prosper independently, indefinitely into the future, and that we can exceed this valuation on a standalone basis.”

Also in September, RSA announced the sale of its Latin American unit for £403m, bringing the total disposals under Hester’s reign to £1.2bn.

During 2015 the group sold units in China, Hong Kong, India, Italy and Singapore as it bids to become a leaner business.

Hester said he now expects to complete the major restructuring of the group this year.

He added: “RSA is now a strong and focused international insurer with leadership positions in the UK, Scandinavia and Canada.

“We see 2016 as the last major restructuring year with disposals and balance sheet work completing and the heavy lifting of core business improvement and cost reduction action continuing.”

Analysts at Numis said: “We think these are encouraging results that should be positive for sentiment, which had fallen back to low levels following the withdrawal of Zurich’s bid interest.”

RSA proposed a final dividend of 7p a share, bringing the total payout for the year to 10.5p.