RSA Profits Down on Flood Losses

March 1, 2001

The U.K.’s Royal & Sun Alliance confirmed previous estimates that claims from the floods which struck Britain in October and November would cost it around £200 million ($290 million), and reduced operating profits for the year 2000 by 16 percent.

While today’s earnings announcement showed gains in the life and pension sectors, operating profits in general insurance fell to £304 million ($440 million) and overall the insurer reported a £476 million ($688 million) profit, down from £566 million ($818 million) posted in 1999.

RSA is sticking to its announced goal for 2001 of achieving an operating ratio of 103 percent. Without the storm losses and investments in e-commerce, it would have exceeded that goal last year, and is continuing to exit less profitable lines and markets.

CEO Bob Mendelsohn told London’s Financial Times that he saw positive effects from the program, stating, “these actions are now beginning to show through in results although somewhat masked by fourth quarter weather events.”

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