Poor weather affects RSA financial results in Canada

RSA Insurance Group plc released Thursday an interim management statement for the first three months of 2014, reporting rate increases in Canada while premiums dropped.

“Poor weather in the U.K., Ireland and Canada negatively impacted first quarter profit,” RSA Group stated. “On a geographic basis we have good results in Scandinavia and Emerging Markets and weaker results in U.K., Ireland and Canada.”

Net written premiums in Canada in the first quarter of this year were £359 million, down 16% from £390 million in the same period in 2013, or 2% at a constant exchange rate.

The British pound was worth $1.84 on Thursday. The increase in the pound since the start of 2013 has “had a significant negative impact on reported results,” RSA Group suggested in its release.

The average exchange rate during the first quarter of this year was $1.83 while in the first three months of 2013 the pound was trading at an average of $1.56.

Across the entire group, RSA reported net written premiums of £1.984 billion in Q1 2014, down 15% from £2.34 billion in the same period in 2013.

In personal lines in Canada, net written premiums were £205 million in Q1 2014, down 14% (or unchanged at a constant exchange rate) from £241 million in Q1 2013.

Also in Canada, RSA’s net written premiums in household dropped from £89 million in Q1 2013 to £81 million in the most recent quarter (which is actually an increase of 7% at a constant exchange rate). Net written premiums in personal motor dropped from £152 million in Q1 2013 to £124 million in Q1 2014, which is a 5% drop at a constant exchange rate.

RSA noted its personal household premiums in Canada were 9% higher in Q1 2014 than in Q1 2013. Over the same period, RSA in Canada increased personal motor rates by 1%, commercial property rates by 4%, commercial liability rates by 3% and commercial motor rates by 1%.

“In Commercial, premiums were down 4% driven by a challenging trading environment and the underwriting actions we have been taking on the portfolio, particularly where we have been re-underwriting or exiting poorer performing accounts,” RSA Group said of its results in Canada.

Net written premiums in commercial in Canada were £94 million in the latest quarter, down from £118 million in Q1 2013.

In commercial property in Canada, RSA Group reported net written premiums of £46 million in Q1 2014, down from £46 million in 2013, which is actually a 5% year-over-year increase at a constant exchange rate.  Net written premiums in liability dropped from £32 million in Q1 2013 to £23 million in 2014, or 15% at a constant exchange rate.

In February, RSA Group had described the company’s worldwide financial performance in 2013 as “poor.”

At the time, it announced plans to “reduce its geographical spread” outside a core group that would include Britain, Ireland, Canada, Scandinavia and Latin America.

When it reported its preliminary 2013 results in February, RSA Group stated underwriting profit dropped from £358 million in 2012 to £57 million in 2013, and it had an underwriting loss of £220 million in Ireland, partly because of “irregularities in the claims and finance functions.”

On May 8, RSA Group noted its strategy “is to compete strongly to retain and attract business in profitable areas and to increase pricing and capital return discipline where required.”

The carrier added it is “prepared to reduce premium volume if necessary as a consequence.”