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RSA Insurance trims estimate for COVID-19 business claims ahead of appeal

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RSA Insurance PLC (LON:RSA) said its underwriting profit rose again in its third-quarter allowing for the cost of coronavirus (COVID-19)-related business insurance claims.

The FTSE100 group has revised down its original estimate of the cost COVID-19 claims by £20mln to £62mln following an initial court ruling in September.

Along with several other insurers, RSA has also appealed that judgment to the Supreme Court.

Elsewhere, the impact of COVID-19 on business activity has suppressed claims said the group but also affected premiums.

For the third quarter to end-September 2020 non-COVID-19 claims frequency was down in a range of 8-36%, said RSA.

“This provides benefits which have been reflected in premium givebacks and other customer reliefs, as well as partially offsetting COVID-19 related claims,” it added in a trading update.

Stephen Hester, the insurer’s chief executive, said: “RSA’s run of record underwriting results is continuing. The group recorded a Q3 discrete combined ratio of 90%, despite providing fully for the UK BI Court ruling in September.”

Group net written premiums in the three months to end September were 3% lower at £4.66bn and flat year-on-year excluding the impact of COVID-19.

Business operating profit for the first nine months was higher, with a significantly improved combined ratio [underwriting profit] and lower investment income even with the additions for UK BI Court case in September, Hester added.

Tangible net asset value per share was 323p (December 31, 2019: 282p).

Hester concluded: “While COVID-19 has held back our profit overall, RSA’s inherent strength and the improvements we have made are driving the business forward in a pleasing manner. The outlook for continued underwriting improvements remains positive.”

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