Shares in insurer RSA (RSA) rose 4.6% to 386p after the company posted surprisingly strong first quarter results and said it was ‘performing resiliently’ in the second quarter.
Group net written premiums were down just 1% to £1.52bn with weakness in UK and Scandinavia offset by growth in Canada thanks to higher prices and better volumes.
Group operating profit was up by ‘double digit percentages’, with an improved combined ratio thanks to lower costs and each area performing in line with or ahead of management forecasts.
The firm also said it saw ‘strong underlying signs of loss ratio improvements in those commercial lines areas that performed less well in 2019’, which bodes well for future quarters.
While the first quarter showed few signs of stress due to the pandemic, and it is still too early to attempt to quantify the impact on the full year, early indications are positive in terms of operating performance.
For the month of April, claims frequency was down between 20% and 55% across its three business regions, with motor accident claims seeing the biggest decline as economic activity ground to a halt.
Claims for travel insurance are largely covered by reinsurance policies, while the majority of claims for business interruption insurance - a contentious area in the UK - are not expected to be eligible under their coverage terms for COVID-19 unless they are specialist schemes and programmes.
The company has already announced it will not pay its 2019 dividend following pressure from regulators, however CEO Stephen Hester said the company was 'very conscious of our shareholder responsibilities, especially with regards to restarting dividend payments when it is prudent to do so'.
