RSA Insurance Group PLC (LON:RSA) said annual underwriting profit fell for the first time since 2013, reflecting the impact of adverse weather costs and losses in the London Market specialty and wholesale business.
Underlying pre-tax profit fell 20.6% to £492mln last year with underwriting profit down 33% to £250mln. The consensus forecast for 2018 underlying profit was £523mln.
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Weather costs rose 3.7%, compared to a 2.6% rise in 2017.
Net written premiums rose 1% on an underlying basis to £6.5bn with growth in Canada and Scandinavia offsetting a decline in the UK and international division.
RSA declared a final dividend of 13.7p per share, taking the total payout for the year to 21p, up 7% on the prior year.
The company said it has taken actions to address the underperforming areas of the business and expects a “good recovery” in 2019.
“2018's challenges have not changed our view of RSA's attractive performance potential or any of our targeted financial metrics,” said chief executive Stephen Hester.
“We recognise the importance of demonstrating resumed progress in 2019 and believe the actions are in place to support that. No business is free of challenge, and the insurance industry will undoubtedly continue to present volatility. We nevertheless are confident that good improvement can be achieved.”
Shares fell 4.3% to 503.2p in morning trading.
Peel Hunt reiterated a 'buy' rating and target price of 620p.
"The outlook focuses on turning around the UK London Market commercial lines business that suffered from higher than anticipated large losses in 2018 second half, it said.
"We believe this can be fixed and see fundamental value in RSA."
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