UPDATE 1-Insurer RSA says severe weather events to hit returns
By Sinead Cruise and Chris Vellacott
LONDON Nov 5 (Reuters) - Insurer RSA has warned insured losses caused by severe weather in Europe and Canada are "materially above assumptions" and full year returns to shareholders are likely to suffer.
On Tuesday RSA blamed October's severe Northern European windstorm and similarly unsettled weather in Canada earlier in the year for the hit to returns, which offset a 7 percent rise in net written premiums to 6.7 billion pounds ($10.7 billion).
"We now expect 2013 return on equity to be below 10 percent," RSA said in a statement. RSA shares were trading down 5 percent at 122.3 pence by 0832 GMT.
In August, RSA said it was on track to meet performance targets for 2013 despite costly floods in the Canadian province of Alberta and the city of Toronto, although the insurer cautioned the impact would continue into the second half of the year.
Massive floods in southern Alberta in June are estimated to be the costliest natural disaster in Canadian history, with the Insurance Bureau of Canada pegging the property damage at C$1.7 billion ($1.65 billion).
Meanwhile, broker Willis Re has estimated insurers will have to pay out up to $1.75 billion in claims after hurricane strength winds swept through Europe in late October.
Damage was caused mainly by falling trees, consisting largely of broken roof tiles and smashed windows, Willis Re said.
RSA said its initial estimates on the net loss across its UK, Scandinavian and Baltics business as a result of the October storm to fall between 45-65 million pounds.
Net losses in Canada, as outlined in its interim results in August have reached 83 million pounds.
However, Eamonn Flanagan, insurance specialist at Shore Capital Stockbrokers said RSA remains an attractive company, highlighting a strong financial position.
"The shares have performed well in recent weeks but we expect weakness this morning. We would view such weakness as a buying opportunity," he said.
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