September 28, 2018 / 6:57 AM / in a month

Insurer RSA's 'disappointing' quarter to hit full year profit - CFO

(Reuters) - RSA Insurance (RSA.L) on Friday said a “disappointing” third quarter, which included a 70 million pound UK underwriting loss, would hit full year profits, sending the group’s shares down more than 9 percent.

British insurers have been hit by claims resulting from extreme weather, including a hot summer and a late winter freeze, dubbed the “Beast from the East”.

“Some of these volatile areas in weather ... unfortunately, will have an impact on our full-year profit,” Chief Financial Officer Scott Egan told Reuters.

RSA shares were down 9.2 percent at 575 pence around 0920 GMT, pushing them to the bottom of London's blue-chip index .FTSE.

The company said its UK and London market business had an underwriting loss of about 70 million pounds ($92 million) in the third quarter due to bad weather, large losses and claims.

“Our UK and ‘London market’ business reported an underwriting loss which is disappointing,” Chief Executive Officer Stephen Hester said in a statement.

Icy roads and frozen pipes in Canada and Britain had also hit RSA’s first-half results, published last month.

Egan also pointed to the international exposure of the UK business, which he said represented about 25 percent.

“We have seen tornadoes in Iowa ... some follow-through from the May flash floods in the UK. It is a combination of smaller things but these things do add up,” Egan said.

RSA, best known in Britain for its More Than brand, also has major businesses in Canada, Ireland and Scandinavia. It offers motor, home and pet policies, as well as commercial insurance.

The company, which has a turnaround plan in place, said its marine portfolio was the hardest hit in Britain.

“A large majority of what impacted the UK are more volatile items ... the flow-through of that into (20)19 will be small,” Egan said.

The past few years have not been smooth sailing globally for complex commercial risks such as marine, hurt mainly by a fall in commodity prices.

“The net impact will be FY (profit) consensus estimates down by more than 10 percent ... the warning increases concerns of on-going volatility,” Investec analyst Ben Cohen, said.

RSA said its international businesses performed well in the third quarter, but higher weather costs led to a lower group underlying pretax profit year-to-date.

The company said group net written premiums had risen about 1 percent year-to-date to 4.9 billion pounds at constant exchange rates, but were down 2 percent at a headline level.

With a market capitalisation of 6.55 billion pounds, RSA competes with Aviva (AV.L), Admiral (ADML.L) and Direct Line (DLGD.L) in a highly competitive car insurance market in Britain where prices have fallen.

Reporting by Muvija M and Noor Zainab Hussain in Bengaluru; Editing by Mark Potter and Jane Merriman

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