LONDON (ShareCast) - Another gloomy update from RSA meant that the non-life insurance sector was the worst-performing category on Monday with the group's share price dropping by as much as a tenth in afternoon trade.
The company revealed that it has launched an independent review of its financial and regulatory reporting processes and controls following the suspension of its Ireland Chief Executive Officer (CEO) and two of his senior executives.
RSA said the suspensions were as a result of "issues in the Irish claims and finance functions" identified during a routine internal audit.
The news comes just days after the company's third-quarter trading statement which said that full-year weather-related losses would be "materially above planning assumptions" following the severe windstorms that battered Northern Europe last month.
The stock was trading 9.95% lower at 108.79p before the close of trade today.
Credit Suisse was also weighing on the share price after cutting its rating for RSA from 'neutral' to 'underperform', saying that a "higher risk premium is warranted" for the stock.
In a research note titled 'Back to Square One', the bank slashed its 2013 forecasts by 18% and trimmed its target price from 125p to 110p.
"In our view, the reserve top-up and capital injection into the Irish business is more important for sentiment and share price than the (larger) weather related profit warning from the recent interim management statement.
"While it is likely this is an isolated event, we believe it will nonetheless undermine confidence in reserving conservatism which is a key area of trust for investors (and an area of debate in RSA's recent past)."
Sector peers esure, CPP, Admiral and Lancashire Holdings were also trading in the red.
However, Catlin was bucking the trend on Monday after reporting that gross premiums written rose by 8% to $4.42b in the third quarter, helped by 19% growth in Casualty premiums.
All but one of its six product groups registered growth in the third quarter, with the company assuring that it continues to reduce its exposure to the underperforming Aerospace sector.
Top performing sectors so far today
Forestry & Paper 11,288.38 +2.85%
Financial Services 7,463.00 +1.64%
Technology Hardware & Equipment 1,117.20 +1.30%
Construction & Materials 4,307.82 +1.19%
Banks 4,959.66 +1.06%
Bottom performing sectors so far today
Insurance (non-life) 1,801.02 -1.54%
Media 6,371.78 -1.41%
Mining 17,073.41 -0.63%
Aerospace and Defence 5,286.41 -0.61%
Automobiles & Parts 8,585.38 -0.41%
BC
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