Rsa Insurance Group Ld Share Discussion Threads

[loganair] 05/8/2015 22:40

Zurich Insurance Group, which is weighing a bid for British rival RSA, requires any acquisition to return 10 percent of the capital employed, the insurer's chief executive said in an interview with Swiss newspaper Finanz und Wirtschaft.

The CEO of the Zurich-based insurer didn't comment on the specifics of its acquisition plans or on any RSA bid, but said any deal must meet the return requirements.

[loganair] 05/8/2015 22:38

Personally if the Zurich offer comes in at 525p I hope RSA rejects it as RSA have said they intend to pay 50% of profits as a dividend which hopefully means a dividend of 15p per share next year.

[dutch123] 05/8/2015 21:53

Analysts expect RSA to have written new premiums worth almost £3.5bn in the first half of 2015, down from £3.9bn in the same period last year following the sale of some international assets. Pre-tax profits are forecast to total £235m.

If chief executive Stephen Hester’s recovery plan for the firm continues as expected, analysts expect full-year premiums and pre-tax profits to stay broadly flat in 2016. Earnings per share would rise to 32.3p, according to consensus estimates compiled by RSA. The figures exclude analysts with connections to the company’s advisers, as well as some anomalous results.

Mr Hester aims to complete £250m in cost cuts by 2017, enabling the company to build up dividend payments that were slashed after the accounting problems uncovered in 2013.

RSA’s advisers include Goldman Sachs and Robey Warshaw, while Zurich is advised by Morgan Stanley.

Zurich is reportedly speaking to banks about raising more than $4bn to help finance its offer, which would also be funded by the insurer’s $3bn cash pile that it has earmarked for acquisitions.

Zurich has said that any offer it makes will be in cash, rather than shares.

Cevian, the activist investor that bought into RSA’s last year, first declared its stake when the shares were trading at about 450p, adjusted for a subsequent share consolidation. The group has not commented on the bid interest in RSA.

Zurich declined to comment.

[dutch123] 05/8/2015 21:49

Zurich’s advisers are weighing up a lower than expected offer to take over the British insurer RSA, The Telegraph understands.

Advisers for the Swiss insurance group are said to be basing their preparations for a bid at about 525p per share, working from consensus estimates of RSA’s earning potential.

Based on 2016 earnings estimates of 31p per share, which might change after RSA’s interim results due on Thursday, a bid at 527p would imply a price-to-earnings ratio of 17 times and value the entire company at almost £5.4bn.

Larger insurance companies listed in London, such as Aviva, Admiral and Prudential, trade on the stock market at prices between 11 and 17 times their expected earnings per share.

The price under consideration is likely to disappoint those in the RSA camp who reacted to reports of a 550p proposal last month with calls for a bid of at least 600p.

RSA’s £7.6bn pension liabilities have also divided opinion about the firm’s value, and discouraged potential bidders in the past. While Zurich is thought large enough to absorb the costs, the range of pensioners and funds from RSA's previous acquisitions make the group more difficult to break up.

The two firms will face questions about the possible marriage when they both report interim results on Thursday morning.

[dutch123] 05/8/2015 21:49

Zurich’s advisers are weighing up a lower than expected offer to take over the British insurer RSA, The Telegraph understands.

Advisers for the Swiss insurance group are said to be basing their preparations for a bid at about 525p per share, working from consensus estimates of RSA’s earning potential.

Based on 2016 earnings estimates of 31p per share, which might change after RSA’s interim results due on Thursday, a bid at 527p would imply a price-to-earnings ratio of 17 times and value the entire company at almost £5.4bn.

Larger insurance companies listed in London, such as Aviva, Admiral and Prudential, trade on the stock market at prices between 11 and 17 times their expected earnings per share.

The price under consideration is likely to disappoint those in the RSA camp who reacted to reports of a 550p proposal last month with calls for a bid of at least 600p.

RSA’s £7.6bn pension liabilities have also divided opinion about the firm’s value, and discouraged potential bidders in the past. While Zurich is thought large enough to absorb the costs, the range of pensioners and funds from RSA's previous acquisitions make the group more difficult to break up.

The two firms will face questions about the possible marriage when they both report interim results on Thursday morning.

[alimo] 05/8/2015 00:54

Let's see what happens this week - Zurich who?

[loganair] 04/8/2015 23:38

RSA bidding war seems unlikely:

With the RSA board allowing it to leak out to the market that its price expectations for the UK insurer are £6 per share or more, the company is at risk of pricing itself out of a deal.

Indeed, an array of sources at major investment banks told The Insurance Insider that a bidding war for RSA was unlikely, with interest from the likes of Allianz, Aviva, Axa and Travelers lukewarm at best.

[optomistic] 04/8/2015 16:08

Moving a bit higher but the volume is surprisingly low given the potential situation!

[optomistic] 04/8/2015 15:53

...sorry wrong thread.

[cc2014] 03/8/2015 12:53

Price moving up suggesting any bid will be higher than 550p. Volume doesn't seem that high to me considering bid situation so will be interesting to see where this goes by the close

[chancer] 03/8/2015 11:58

Aug 3, 2015 - 10:45


(Bloomberg) -- RSA Insurance Group Plc climbed to the highest level since November 2013 as Zurich Insurance Group AG looked to raise financing ahead of a possible takeover offer for the British firm this week.


The shares advanced 2 percent to 524.5 pence at 11:03 a.m. in London, extending their rally to 20 percent since July 28, when Zurich said it was considering a bid. The Swiss insurer is said to be talking to banks about raising more than $4 billion, two people familiar with the discussions said Friday.

[loganair] 03/8/2015 10:59

RSA Insurance gains on reports Zurich is looking for financing:

Shares in RSA Insurance rose on Monday following weekend press reports that the company's board is looking for a 600p per share bid from Zurich Insurance, and that it will look present a strong case for the group at first-half results on 6 August.
Reports over the weekend also suggested that Zurich Insurance is looking for an additional $4bn in funding to finance a deal.

Howard Whitman analyst Craig Bourke said 600p per share looks full.

"RSA's net underlying profit in 2014 was £161m after debt interest, and even after allowing for a restructuring of debt, would require substantial savings on its £1.2bn cost base to achieve Zurich Insurance's hurdle rate."

He said there would be additional tax gains from shifting processing to Zurich Insurance's Irish operation but added that any bid level above 580p would require brave assumptions to be justified.

"Certainly, this level would deter rival bids, especially given the barriers to break-up posed by the pension fund," he said.

Nomura, however, said it still sees a strong possibility of a deal at 600p.

"We believe 15% pro-forma cost synergies (of the addressable cost base), could still make the numbers work for Zurich on a 600p bid, as this would still equate to its minimum 10% return on investment on deals."

[loganair] 03/8/2015 10:56

Stephen Hester’s role at risk as offer for RSA looks likely:

“I’m not a great fan of the valuation of RSA, but I think what [Hester] has done is probably the right thing,” said Barrie Cornes, analyst at Panmure Gordon.

“He raised money and cut the dividend, he did a large reinsurance deal – and he did all this in very short order.”

Cornes noted that at one point in the midst of RSA’s downward spiral, ratings agency Standard & Poor’s considered downgrading the insurer’s rating to BBB plus, a move that would have proven catastrophic for the firm.

Had the downgrade taken place, brokers would not have been able to place business with RSA, said Cornes.

“But Hester recovered it and the downgrade didn’t happen,” he added.

“I’m not a great fanboy of his but I think he did the right things,” he reiterated.

“He was brought in to take some very hard decisions and big steps and that’s what he has done.”

However, despite making several difficult decisions, Hester has not met with universal approval, and RSA’s share price still has not recovered to where investors want it to be.

Following publication of the company’s 2014 results earlier this year, analysts at London Capital Group noted that, while the turnaround plan was “on the right track”, share price reaction has been “muted so far”.

Meanwhile, Cornes said that the potential Zurich offer was a reflection of the underpriced nature of RSA’s stock prior to last Thursday.

Michael van Dulken at Accendo Markets pointed out that Hester made “quite a sudden departure from RBS”, a tactful allusion to the political decisions that led to Hester’s resignation from the bank – when he stood down in June 2013, sources at the bank said chancellor George Osborne had precipitated the move.

Van Dulken also highlighted recent high-level departures from Barclays, including chief executive Antony Jenkins and outgoing deputy chairman Sir Mike Rake – moves that seemingly came out of the blue, but are widely believed to have been driven by new chairman John McFarlane in an effort to accelerate progress at the bank.

“Boardroom departures like that suggest that maybe things aren’t changing quickly enough,” agreed Van Dulken.

While he acknowledged that Hester had arguably walked into a more difficult task at RSA compared with RBS, Van Dulken added: “Since he has been at RSA to be honest it’s not a name that most of our clients are particularly interested in.”

Given that RSA’s share price has proved so resistant to his much-touted turnaround abilities, Van Dulken said: “A successful deal for the business might be the best exit strategy for Hester.”

If RSA is eventually bought by Zurich, Hester’s role will be thrown under even great scrutiny.

[chinese investor] 03/8/2015 08:11

I'm Holding Out For 600p !

[blueteam] 03/8/2015 08:10

SO £6 is the price to buy the company, price must go to £5.80 very soon. Still upside and that's without other companies getting involved.

[loganair] 02/8/2015 20:43

Stephen Hester will want the most out of Zurich’s bid for RSA:

Expect an uncompromising performance from the under-pressure chief executive at this week’s annual meeting.

Stephen Hester, chief executive of RSA Insurance, has a big week ahead of him. Just how big depends on whether Zurich, the Swiss insurer, approaches him with a bid for the company.

Zurich was flushed out last week, revealing to the stock exchange that it was considering a cash offer for RSA. The announcement could prompt rivals to enter the fray while they have the chance.

Hester, one of the City’s toughest characters, joined RSA early last year to clear up the mess left by a series of profit warnings and an accounting scandal in Ireland. Before that, he was chief executive of Royal Bank of Scotland for five years. At RSA, he has raised £748m in a rights issue and sold off surplus businesses but has been under pressure to produce speedier results from RSA’s biggest shareholder, Cevian Capital, chaired by former City minister Lord Myners. He also faced a shareholder revolt over his multimillion-pound pay package at RSA’s AGM in May. At a mooted offer price of 550p, his RSA shares would be worth £3.3m.

One might think Hester would be happy to sell RSA and move on, but George Osborne ejected him from RBS before his work was complete, so pride may come into it. Expect an uncompromising performance at RSA’s half-year results on Thursday designed to convince shareholders that his plan is achieving results, and to push up any bid from the Swiss.

[blueteam] 02/8/2015 11:29

so £6 target and better result could see this reached. More upside here.

[loganair] 02/8/2015 09:03

RSA is one of a clutch of firms in the sector reporting this week as the industry digests the impact of a variety of issues from rising motor insurance premiums to annuity reform.

Zurich last week confirmed speculation that it was weighing up an offer for the group.RSA said it had not held talks with Zurich and advised shareholders to take no action, but analysts will want to gauge if management are open to a deal.

Turning to its half-year profits brokers at Numis expect “a significant improvement” jumping more than three times to £218m compared to a year ago, largely due to lower weather losses.

[loganair] 01/8/2015 23:57

Insurer RSA ready to hold out for 600p-a-share bid from Zurich:


The board RSA are understood to be pushing for a take-out price of at least 600p a share from potential bidders Zurich, The Sunday Telegraph has learnt.

Advisers to RSA were this weekend turning their attention to the potential value of the company after last week’s confirmation from the Swiss insurance giant that it is considering making a takeover offer.

At last week’s reported price of 550p a share, investors would get a premium of more than 20pc to the so-called undisturbed price before takeover rumours began to swirl.

However typical take-out premiums for FTSE companies have started at 30pc or higher of late.

Recent deals for other property and casualty insurers, such as Meiji Yasuda’s $5bn (£3.2bn) bid for US firm StanCorp last week, have commanded premiums north of 40pc.

It is for that reason that the Swiss insurer is thought likely to have to raise its mooted bid if it is to receive the backing of the eight-man board.

RSA’s board met last week as scheduled to discuss the results, although the takeover interest from Zurich meant the agenda was more crowded than expected.

The firm, once known as Royal & Sun Alliance, has spent the few days since Zurich declared its intentions last Tuesday assembling a large and growing team of advisers.

Goldman Sachs, the investment bank already working on the sale of RSA's Latin American operations, is helping to draft the group’s next moves with Zurich. Paul Miller, head of insurance for Europe, the Middle East and Africa at Goldman, is leading the team.

Robey Warshaw, whose founders worked with RSA chief executive Stephen Hester on deals during his time in charge of Abbey National and later RBS, is also advising.

Brokers Bank of America Merrill Lynch and JP Morgan are also understood to be playing a role. Morgan Stanley is working with Zurich.

RSA’s pension liabilities of £7.6bn have discouraged other bidders in the past. Although insurer-sponsored pension funds are viewed more generously than annuity books by regulators assessing capital levels, the RSA pension fund is larger than its entire market value, and comes with three sets of trustees from acquisitions.

[gutterhead] 01/8/2015 23:49

Let's wait and see rather than guess

[loganair] 01/8/2015 22:41

Chancer - It seems to me that the management of Zurich want to go for it while the shareholders would much prefer the excess cash to be repaid to them.

[chancer] 01/8/2015 22:15

loganair-

Are you therefore suggesting your research is suggesting a double bluff just to temporary increase the share price of RSA knowing that nothing will transpire except to infiltrate the false up's and downs of the share prices to the advantage of manipulators ?