RBS insurance arm Direct Line - which will be spun off as a separate company on the stock market - has revealed a rise in profits despite worse-than-forecast weather claims worth £40 million.
The division, which owns the Direct Line, Churchill and Green Flag brands, said the wettest April-to-June period since records began in 1910 was behind the surge in home claims in the three months to June 30.
But despite the unprecedented level of claims, the group revealed a 6% rise in operating profits to £219 million and increased the number of its in-force policies by 2% to 20.1 million.
The robust results will reinforce the group's separation plans, which RBS hopes to complete by the end of the year and will see Direct Line traded as a standalone business on the stock market with a reported value of up to £5 billion.
RBS is required to sell the business, which also includes the Privilege brand and broker business NIG, by the end of 2014 in return for its £45 billion taxpayer bail-out.
Direct Line boss Paul Geddes said: "Aside from certain transitional services provided by RBS Group, we have essentially achieved the goal of operating as a standalone insurance company."
RBS Insurance, which is headquartered in Bromley, south east London, and has operations in the UK, Germany and Italy, said it bolstered its competitive position after securing a five-year contract with Sainsbury's Finance to provide customers with home and car insurance.
The business has introduced a new management system to deal with motor claims at Churchill, Direct Line and Privilege, as well as new home claims at Churchill, to improve efficiency.
Direct Line said net claims fell 18% to £1.2 billion in the period as the bad weather claims were offset by the exit of the personal line broker business and reserves released under the transformation plan.
The sale of RBS Insurance is part of a disposal programme imposed on the bank by the European Union. It has already agreed the sale of more than 300 UK branches and its 51% stake in RBS Sempra Commodities.