RSA forecasts £25m coronavirus hit

RSA Group has forecast a hit of £25m for coronavirus-related claims, net of reinsurance, based on 25 000 valid claims received in March and April this year. It added that in April, overall claims frequencies were down between 20% and 55% across its three regions – Canada, Scandinavia and UK & International – particularly in motor.

RSA’s coronavirus-related group forecast included 23 000 travel insurance claims with estimated costs of £16m gross of reinsurance, claims for wedding cancellation with an estimated reserve of £7m, and claims under certain business interruption and related coverages with an estimated claims reserve of £17m.

The vast majority of non-travel claims relate to RSA’s UK and international division.

In terms of business interruption insurance RSA stated: “The great majority of business interruption claims are not expected to be eligible under their coverage terms for COVID-19. However, there are a number of areas where claims are being paid, mostly in certain specialist schemes and programmes. “

For the first quarter of 2020 RSA Group recorded group net written premiums of £1.52bn, down 1% excluding exited lines compared to the same period last year. UK & International premiums were down 5% to £572m excluding exits, with UK household recording positive volume growth.

Overall, RSA said that group business operating profit was up by double digit percentages, both including and excluding exit portfolios, with an improved combined ratio and slightly lower investment income.

Chief executive, Stephen Hester commented: "RSA's first quarter results were strong, continuing the momentum seen in 2019. However, focus has now naturally shifted. Our thoughts and deepest sympathies go to those most directly affected by COVID-19. And RSA's attention is fixed on responding to the impacts of COVID-19 on economies, our customers and through that on ourselves.

“Whilst it is too early to estimate the extent of these, RSA is resilient and determined to sustain strong and appropriate support for our customers in these testing times. We are also very conscious of our shareholder responsibilities, especially with regards to restarting dividend payments when it is prudent to do so."

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