Partly Cloudy

Partly Cloudy

max temp: 15°C

min temp: 9°C

ESTD 1874 Search

Insurance: RSA launches £775m rights issue following slump in profits

13:29 27 February 2014

RSA is to tap its shareholders following hefty weather claims and a slump in profits.

RSA is to tap its shareholders following hefty weather claims and a slump in profits.

Former RBS boss Stephen Hester launched a huge City fundraising today as part of his bid to revive More Than insurer RSA.


Mr Hester, who joined the company less than a month ago, revealed the extent of RSA’s current difficulties by announcing that operating profits for 2013 had slumped to £286million from £601m the previous year.

He scrapped the company’s dividend and asked shareholders to stump up £775m in a rights issue, equivalent to 20% of RSA’s market value, in order to repair the insurer’s balance sheet.

The company, which has operations in the UK, Scandinavia and Canada, has been hit by a series of profit warnings, an accounting scandal at its Irish subsidiary and a surge in flood claims following the wettest winter on record.

Mr Hester said: “RSA’s 2013 results are poor and we need to grasp the nettles of both underperformance and undercapitalisation.”

The recent weather has continued to hamper the company’s recovery plans, with flooding in the UK and Ireland and ice storms in Canada likely to result in a claims hit of between £75m and £100m.

This is on top of the £41m incurred by its UK and Europe division in the final quarter of last year, including from the impact of the Xaver storm.

In the UK, RSA made an underwriting profit of £36m as a result of a good performance in its property and household books, offset by losses in personal motor insurance.

In Ireland, the underwriting loss was £220m, reflecting the need for reserves strengthening and the impact of the irregularities within the Irish claims and finance functions.

RSA recently sought to draw a line under its Irish scandal after an independent investigation found “inappropriate collaboration” among the division’s managers led to a £200m black hole.

Mr Hester is being paid an annual salary of £950,000, with the potential for long-term incentive scheme shares worth up to £2.9m this year on top of a potential annual bonus.

He received praise for leading the rescue of RBS but left the state-backed lender at the end of September after five years at the helm. It was thought his departure followed a series of rows with Chancellor George Osborne.



Delegates from the ABP Marine Conference at ABP, Old Custom House, Port of Ipswich.

Some of best marine minds in the country were in Ipswich this week as harbour masters, dock masters and marine managers gathered for an annual conference.

DFS is celebrating record results.

Sofa chain DFS Furniture has hailed a record set of results as Britain’s buoyant housing market and growing consumer confidence boosted sales.

The Bank of England Monetary Policy Committee is expected to keep interest rates at 0.5%.

The Bank of England is expected to keep interest rates on hold today amid mounting concern over a slowdown in the economy.

Owner and head chef of Sweet P's, Pierre Rollins.

Soul food restaurant Sweet P’s is due to reopen next week after a devastating kitchen fire six months ago.

The new board members at employee-owned social enterprise Leadiing Lives who were elected at its AGM.

More than 50 jobs have been saved in Suffolk and north-west Essex following the closure of care support charity Crossroads Care East Anglia.

The Great House in Lavenham has been awarded three rossetts from the AA. Left to right, Martine and Regis Crepy, Enrique Bilbault, Swann Auffray, David Castro, Guillavme Dericq.

An award-winning Suffolk restaurant has officially been recognised as one of the best in the country.

George Bradley of Suffolk Secrets.

The belated arrival of settled weather in mid-September has helped to deliver an “Indian Summer” boost for Suffolk Secrets, one of the county’s leading holiday lets businesses.

Some of SABMiller's beer brands.

Brewing giant Anheuser-Busch InBev today unveiled another improved offer for rival SAB Miller.

Tesco  has revealed a 70% plunge in half-year earnings for its UK and Ireland business.

Supermarket giant Tesco revealed a 70% fall in half year earnings for its UK and Ireland business despite seeing an improvement in under-pressure sales.

The Cask Report has highlighted the importance of real ale to the the pub trade.

Drinkers of real ale are a “lifeline” for Britain’s hard-pressed pubs sector, according to a new study.

Most read

Most commented

Topic pages