Group News

2010 Update: Strong performance despite extreme weather conditions

• Weather losses in November and December 2010 around £142m more than normal levels
• Across the Group, full year 2010 weather impact is around £255m more than normal levels
• Full year 2010 results1 expected to show NWP growth of 11%, a COR of between 96.5% and 97.0% and an operating profit of between £600m and £630m
• Emerging Markets achieves goal of NWP of £1bn

2011 Outlook: Confident of delivering premium growth and strong profitability

• Expect to deliver continued NWP growth
• COR to be better than 95%
• Investment income of around £550m and investment gains of around £50m

Andy Haste, Group CEO of RSA, commented:

“This is a strong result in what has been an extremely tough year for the industry, including the European freeze and Chilean earthquake in the first quarter and the coldest December in the UK for 100 years. To deliver a COR of between 96.5% and 97% in these conditions, underlines the strength and resilience of our portfolio. We look forward to 2011 with confidence and, as our guidance today shows, expect to deliver continued premium growth and strong profitability.”

Winter Weather Update

Across the Group, the impact of adverse weather in November and December 2010 is around £142m more than normal levels, of which £110m is in the UK, £17m across Scandinavia, £7m from Ireland, £6m in Emerging Markets, mainly due to Hurricane Tomas and £2m in Italy.
In the UK, around £72m of the adverse experience relates to Household, where we have a market share of around 6%, with a further £26m in Commercial Property and £12m across Motor and other classes.
In Household, we have experienced a significant increase in claims relating to burst water pipes with around 8,000 claims at an average cost of approximately £6,700 received since 1 November, with volumes peaking in the weeks around Christmas, as well as an increase in claims from Household schemes. In addition, we have received almost 19,000 home emergency claims, around 5,500 snow claims and almost 5,700 other weather related claims. Our UK call centres handled around 90% more calls than normal in December and to date, we have received over 82,000 more calls than usual.
In Commercial Property, we have experienced over 2,300 claims, with around 15 claims accounting for approximately 23% of the adverse impact and the remainder being smaller losses.
Across the Motor book, in the period from 26th November to 24th December we experienced around a 70% increase in single vehicle accidents and around 20% more accidental damage claims compared with early November.
In Scandinavia, December was reported to be the second coldest ever recorded in Denmark and the coldest since 1915 in Stockholm. The impact of this freeze is around £17m more than normal levels, with the cost spread evenly across Personal and Commercial lines driven by an increase in burst water pipes and motor claims.
The impact from Ireland is around £7m more than normal levels, with the cost again driven by burst water pipes as the country experienced the coldest December on record.
Across the Group, our customers remain our key focus and we mobilised additional resources to ensure they received a prompt response, with claims dealt with as quickly as possible.

2011 Outlook

The underlying results of the Group remain strong and we look forward to 2011 with confidence. We have great businesses, with strong positions in attractive markets and, as it stands today and assuming a more normalised level of weather losses, we expect to deliver continued premium growth, a combined operating ratio of better than 95%, investment income of around £550m and total investment gains of around £50m.

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