Multinational insurance group RSA has released its results for the first quarter of 2020, which include around £25 million of claims related to the COVID-19 pandemic, net of reinsurance.
In total, the company registered 25,000 claims linked to COVID-19 that have coverage and will pay out, of which about 23,000 are travel claims.
Costs include travel claims of £16 million gross of reinsurance, claims for wedding cancellation with an estimated reserve of £7 million, and claims under certain business interruption and related coverages with an estimated claims reserve of £17 million.
Despite these losses, RSA business operating profit for Q1 was up by double digit percentages, with an improved combined ratio and slightly lower investment income.
Group weather costs were 3.7% of net earned premiums, which was higher than expectations but worse than the 3.2% recorded in Q1 2019, partly due to February flooding in the UK
The large loss ratio was 8.9% with improvements in Canada offsetting a higher ratio in UK & International, and the attritional loss ratio improved overall, and in each region.
Group net written premiums of £1,521m were down 1% as areas of profitable growth were offset by planned underwriting effects in portfolios being remediated.
In Scandinavia premiums of £610 million were down 3%, while in Canada premiums increased 8% to £303 million, and in UK & International premiums were down 5% to £572 million.
“RSA’s first quarter results were strong, continuing the momentum seen in 2019,” said Stephen Hester, RSA Group Chief Executive. “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,” he continued. “We are also very conscious of our shareholder responsibilities, especially with regards to restarting dividend payments when it is prudent to do so.”
RSA expects to see a COVID-19 effect on written premium income for 2020, as some customers reduce their coverage to reflect changed needs, and various rate adjustment and other programmes impact.
For the month of April claims frequency was down on last year in a range 20-55% across RSA’s three regions.
Scandinavia frequency decline was at the lower end of this range reflecting milder lockdown impacts, and, in general, motor accident lines were most affected, though most business lines saw meaningful declines.
“It is not yet possible to assess how much of this data reflects delayed timing of claims or what the impact will be on claims severity of disrupted supply chains and other factors,” RSA noted. “However, it is likely that frequency effects overall will provide an offset to areas of negative COVID-19 impact on premiums and claims.”