Aviva Plc, RSA Insurance Group Plc, and Direct Line Group Plc are poised to bear the brunt of losses from flooding in Britain that is estimated to cost the industry as much as £1 billion ($1.667 billion).

Aviva, the U.K.’s third-largest insurer by market value, is expected to incur the greatest absolute loss based on its market share, with RSA and Direct Line the most exposed from an earnings perspective, analysts at Goldman Sachs Group Inc. led by Ravi Tanna wrote in a report to clients.

“U.K. household and commercial insurance providers are likely to incur the heaviest losses,” Tanna wrote in the report, which was dated yesterday. “With the difficult conditions ongoing, current estimates may yet end up being revised materially.”

Britain is reeling from storms that have saturated the ground and battered coastlines since December. The Association of British Insurers put the cost of the floods at Christmas and the New Year at £426 million [$710 million], most of which will hurt 2013 earnings. Goldman Sachs estimates the more recent floods could lead to a further £500 million [$833.8 million] of losses.

For Direct Line, RSA and Aviva, losses as a percentage of 2014 net income will be about 15 percent, 9 percent and 5 percent respectively, according to Goldman Sachs.

Shoulder Risk

Earlier this week, Bank of America Corp. said Direct Line and RSA would be the insurers most exposed to the floods. Morgan Stanley said losses will fall mostly on insurers rather than reinsurers, which shoulder a proportion of the risk.

All three banks said the impact is likely to be lower than the 2007 floods, which cost insurers £3 billion [$5 billion]. Analysts expect a large share of the flood losses will fall within insurers’ existing weather budgets. Should the losses exceed £1 billion, reinsurance programs will limit losses.

“We expect company losses to rise in proportion with industry losses,” Goldman’s Tanna wrote in a note. “But our expectation is that net losses will be capped owing to reinsurance cover in place.”

Aviva and Direct Line’s reinsurance cover takes effect at £150 million [$250 million], while for RSA it kicks in at £75 million [$125 million], according to Goldman Sachs.

Direct Line is due to report full year results on Feb. 26. RSA, which this month appointed Stephen Hester as chief executive officer, will report results on Feb. 27 along with its plan to repair the company’s balance sheet. Aviva posts its full-year earnings on March 6.

–Editors: Edward Evans, Jon Menon