RSA Insurance shares under the weather as storm and flood claims hit profits

RSA Insurance shares tumbled today after the company warned that severe weather in Europe and Canada is likely to hit its profits this year.

The company said damage from the St Jude’s storm at the end of last month was set to cost it up to £65 million, with most of the claims coming from Scandinavia and not the UK.

Flooding in Alberta and Toronto has also hit the insurer heavily and RSA now expects its return on equity to be below 10%.

Analysts reckon the weather catastrophe losses could impact its full-year operating profits by about £55 million.

Boss Simon Lee said 2013 had been “an exceptionally tough one for weather events for the group”, while mounting bodily injury claims in Ireland had also impacted its reserves. Shares in the company fell by more than 7% following the warning despite it growing its premiums to £6.7 billion during the first nine months of the year.

Shore Capital analyst Eamonn Flanagan said that RSA remained in a strong financial position despite the flurry of weather-related claims that have hit it.

He added: “The shares have performed well in recent weeks ... we view today’s weakness as a buying opportunity.”