Shares in RSA Insurance slumped yesterday, after the More Than owner slashed its full-year dividend by a third.
Chief executive Simon Lee said it was a prudent move that would enable the company to invest in opportunities for growth.
But the decision to rebase the dividend wrong-footed investors, causing its shares to slide 14% in the FTSE 100 Index and pulling rival Aviva 4% lower.
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The cut in the payout to 3.9p a share, from 5.82p a year earlier, came as RSA announced a 6% drop in operating profits to £684 million.
Net written premiums rose 5% at constant exchange rates to £8.3 billion but RSA was impacted by summer floods in the UK and two earthquakes in Italy, prompting it to revise its planning assumptions after an increase in the number of severe weather events over recent years.
The continuing effect of falling bond yields meant RSA's investment income was down 11% to £515m and the prospect of this figure dropping to £470m in 2013 also prompted the decision to rebase the dividend.
Mr Lee said: "The new dividend is appropriate for the business today, and will allow a progressive policy going forward."
RSA revealed a £50 million hit in July after the UK's dire summer weather resulted in more than 6,500 claims since June alone.