6th Aug 2015 09:00
LONDON (Alliance News) - RSA Insurance Group PLC on Thursday presented itself as an insurer that can thrive as an independent company, reinstating its interim dividend and beating analyst forecasts, as Zurich Insurance Group considers whether to make a takeover offer.
"The ball is in their court," RSA Chief Executive Stephen Hester told journalists in a conference call. "Under takeover rules, clearly there are very, very strict constraints on my ability to discuss what is at the moment is only theoretical in terms of what they're ultimately going to do."
"Our very, very strong focus is making sure that RSA is on a path to becoming the most valuable company we can make it, and we believe that path is one we can tread. The evidence is there today. We believe the value of RSA standalone can be strong for many years to come.
Earlier on Thursday Zurich Chief Executive Martin Senn had said that a deal for RSA could bring "significant benefits" to the Swiss insurer and its shareholders.
"We believe that a transaction could bring significant benefits to us and to our investors in terms of the complementary fit of RSA's business with our own operations and in financial terms. But any capital deployment would need to meet the same hurdles that we apply to any other investment," Senn said in a statement.
RSA's Hester said: "Should we have discussions with any third party about the company, our concern would be for our shareholders and them benefitting not only from the strong improvements in value that we will create in coming years but also from any synergies that might be available."
Hester, who earned respect for leading Royal Banking of Scotland Group PLC in the wake of its GBP45.5 billion bailout in the financial crisis, has been chief executive at RSA since February 2014, when he was assigned to fix the FTSE 100 insurer in the wake of an accounting scandal at its Irish business.
With the help of a GBP773 million rights issue and the sale of numerous businesses, Hester has been trying to put RSA on strong foundations for the future.
RSA reported a GBP288 million pretax profit on a management basis in the first half of 2015, compared with GBP69 million in the corresponding period the prior year. Its operating result on the same basis was up to GBP259 million from GBP141 million. The results beat estimates of GBP235 million and GBP231 million, respectively, forecast by analysts polled by the company.
The insurer reinstated its interim dividend at 3.5 pence per share, slightly ahead of the 3.4p analyst forecast.
"The company has moved...out into the middle of the class with lots of room left to go to move towards top of the class, but at least I think we can say the dunce's cap can be passed to someone else," Hester told journalists.
"Profits are up strongly on both a headline and underlying basis. Premium income has been stabilised, underwriting and cost levers are responding positively," Hester said.
RSA shares were down 1.5% at 516.00 pence on Thursday morning in London.
By Samuel Agini; [email protected]; @samuelagini
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