RSA's profits dive as it pays out millions in weather claims
Ihe insurer Royal & SunAlliance yesterday became the latest company to say it had taken a multimillion-pound hit from this winter's cold snap.
It said the extreme weather in November and December resulted in losses which were £142m higher than normal. Across the company, the impact of bad weather for the full year was put at "about £255m" more than normal loss levels.
Scientists have warned that global warming could result in more extreme weather affecting the UK. One theory holds that melting polar sea-ice could result in more frequent high-pressure systems that send cold Arctic air over Britain and Western Europe in winter.
Insurers are increasingly concerned about the possible effect of global warming on their businesses. Despite the recent controversies and debates between climate scientists, they have not joined forces with climate-change sceptics.
RSA, in fact, said it was seeing "an increase in the number and severity of adverse weather events" generally. A spokesman for the company added: "Whether that is down to climate change or not is difficult to say, but we monitor and model natural catastrophes and this is something we are keeping an eye on going forward."
Were the company to identify a clear long-term trend of increasing insurance events related to global warning, it would inevitably raise premiums.
After several years when major catastrophes, excluding those caused by severe weather, were relatively rare (at least in places where people could afford insurance), last year has proved a rude awakening for the industry, with the major earthquake in Chile followed by the Deepwater Horizon oil spill in the Gulf of Mexico. The La Niña effect in the Pacific, whose impact has been felt across the world and has caused the recent devastating floods in Australia, is also likely to cost the industry up to £4bn when all claims are in.
As a result of this year's weather, RSA said it would miss its full-year profits forecasts. Operating profit for the year is expected to be between £600m and £630m, against previous predictions of about £740m.
But RSA said this would not affect its policy of increasing its dividend at least in line with inflation. Andy Haste, the chief executive, said: "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."
RSA also pledged to deliver "continued premium growth" and predicted a strong 2011 "assuming a more normalised weather loss".
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