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Prices & Quotes - UK Markets - RSA Insurance Group (RSA)

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Share Price:
Down 428.80p
Change Today:
-7.60p
Market Cap:
4,436.56m
Sector:
Insurance (non-life)

Policyholders claim partial victory in Covid-19 business interruption test case

By Abigail Townsend

Date: Tuesday 15 Sep 2020

LONDON (ShareCast) - (Sharecast News) - The Financial Conduct Authority has claimed a partial victory in a closely-watched test case concerning business interruption payouts during the Covid-19 pandemic.
The City regulator brought the case on behalf of policyholders earlier this year, after a large number of claims made during the height of the pandemic and lockdown were rejected by insurers.

The industry claimed that these policies were never intended to cover government-imposed measures in a global pandemic.

The FCA sought clarity on behalf of policyholders by selecting a representative sample of policy wordings issued by eight insurers for the High Court to consider. The insurers included Lloyd's of London underwriter Hiscox, RSA and Australia's QBE.

The High Court handed down its judgement on Tuesday and the FCA said it had found in favour of the policyholders on the "majority" of key issues.

Christopher Woolard, interim chief executive, said: "Today's judgement is a significant step in resolving the uncertainty being faced by policyholders.

"Coronavirus is causing substantial loss and distress to businesses and many are under immense financial strain to stay afloat. Our aim throughout this court action has been to get clarify for as wide a range of parties as possible, as quickly as possible, and today's judgement removes a large number of those roadblocks to successful claims, as well as clarifying those that may not be successful."

The insurers are expected to appeal. But Woolard called on the industry to "reflect on the clarity provided here", irrespective of plans to appeal and to consider what steps individual firms can now take to progress those claims the High Court ruled should be paid.

However, Huw Evans, director general of the Association of British Insurers, said: "The judgement divides evenly between insurers and policyholders on the main issues. The national lockdown was an unprecedented situation that posed understandable questions of interpretation for some business contracts.

"This is a complex judgement spanning 162 pages and 19 policy wordings and it will take a little time for those involve in the court case to understand what it means and consider any appeals."

The judgement did not say that eight defendant insurers were liable across all of the 21 different types of policy wording in the representative sample considered by the Court. The FCA said that each policy therefore needed to be considered against the judgement to assess what it means for that specific policy, but that all policyholders with affected claims should expect to hear from their insurer within the next seven days.

Hiscox said it would assess the judgement "to ascertain how the Court's conclusions should be applied to the claims and circumstances" of individual policyholders.

"The group estimates additional Covid-19 claims arising from business interruption to be less than 100m net of reinsurance. This encompasses claims from all divisions, including Hiscox Re, and is a reduction of the 150m from the upper end of the group's previously published risk scenario," it said.

The City welcomed Hiscox's update and reduction in estimated liabilities, sending the shares 13% higher by 1300 BST.

RSA said it estimated that the additional financial impact of the judgement would be 104m on a gross basis across the portfolio of relevant business interruption policies. However, that would be reduced to around 85m following the application of its catastrophe reinsurance protection, it said, "which is in turn expected to reduce further through qualifying as a loss covered by the group-wide aggregate reinsurance programme".

The blue chip also announced it was resuming dividend payouts, with the payment of the delayed interim dividend set at 8p per ordinary share. Its shares were trading 5% higher by 1300 BST.

Note 1: Prices and trades are provided by Digital Look Corporate Solutions and are delayed by at least 15 minutes.

 

RSA Market Data

Currency UK Pounds
Price 428.80p
Change Today -7.60p
52 Week High 582.80p
52 Week Low 326.90p
Volume 558,680
Shares Issued 1,034.64m
Market Cap 4,436.56m

Performance Indicators

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What The Brokers Say

Strong Buy 15
Buy 1
Neutral 2
Sell 0
Strong Sell 0
Total 18
strong_buy
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RSA Dividends

  Latest Previous
  Interim Interim
Ex-Div 12-Nov-20 05-Sep-19
Paid 04-Dec-20 11-Oct-19
Amount 8.00p 7.50p

Trades for 27-Oct-2020

Time Volume / Share Price
14:52 192 @ 428.80p
14:52 500 @ 428.80p
14:52 900 @ 428.90p
14:52 237 @ 428.90p
14:52 216 @ 428.80p

RSA Key Personnel

Chair Martin Scicluna
CEO Scott Egan