Rsa Insurance Group Ld Share Discussion Threads

[loganair] 07/11/2014 11:10

Beaufort Securities - Our view: The company’s net written premiums suffered due to a strategic shift in focus and poor market response for insurance markets in general. Although most of the investment income remains in line with the H1 trends but the absence of prior year reserve additions is likely to impact the profits this year. Nevertheless, the company launched a US$1.3bn rights issue in February and astutely divested its assets to improve sustainable levels of performance to bolster its capital position. On one hand we are confident of a business recovery in future with improving economic conditions but on the other we are apprehensive about the problem of falling premiums. Therefore we retain a Hold rating on the stock.

[optomistic] 07/11/2014 09:27

tfergi...I reckon the rest of us are sat quiet somewhat shell shocked!

surprisingly the market is not taking into account all the asset disposals. All these 'sales points' that have gone must have an impact on the premium incomes.

[huttonr] 07/11/2014 08:59

tfergi - certainly not the only holder.
I'm not happy with the events of the last year or so, but RSA does appear to be moving in the right direction now - and seems undervalued at the current share price. It may be worth picking up some more when the drop bottoms out - perhaps 400/410?

[tfergi] 07/11/2014 08:15

Am I the only one with a holding in here !? Helloooo !?

[loganair] 06/11/2014 17:32

"RSA’s [update] was ‎mixed in our view, with good progress at the strategic level, especially with disposals, but continuing issues at the operational level, arising from a mixture of loss events, market conditions and reserve movements," said Shore Capital analyst Eamonn Flanagan. “Overall, we were pleased there were no 'howlers' in the IMS."

As RSA’s recovery takes shape, City analysts believe that the company can return to growth next year. Indeed, City figures suggest that RSA’s earnings per share will jump 19% to 36.1p during 2015. That being said, earnings per share are expected to contract by 13% this year. But still, 2014 has been a transformational year for RSA.

[hvs] 06/11/2014 15:52

Hester has got his MAGIC wand out.

Soon be BONUS and PENSION TOP UP time.

Its ONLY OTHER PEOPLES MONEY.

lol !!!!!

Lol !!!!!!!

If he has his way, within between five and 10 years, How many BONUSES and PENSION TOPS is that ?

lol !!!!!!!

[loganair] 01/11/2014 22:55

Shoots of recovery:

RSA’s focus on streamlining and efficiency has already yielded positive financial results. Having suffered a dreadful second half in 2013, the company’s interim results to June 30 were far improved, with the company reporting a modest pre-tax underwriting profit of £69m (a major bounce-back from the £494m loss in the second half of 2013, but still way down on the £250m profit in the first half of last year).

Hester also steered the company through a successful £748m rights issue in April, which in combination with more than £750m now expected from the sale of RSA’s various non-core businesses, has shored up the balance sheet significantly, leading to swift credit rating upgrades. Indeed, resulting improved investor sentiment was illustrated by a strongly oversubscribed £400m debt issuance from the company at the start of October.

Challenges remain, with net premiums down overall compared to the first six months of 2013, and underwriting performance still in the red in the UK/Western Europe and emerging markets in the first half of this year (though the fallout from the Ireland debacle is weighing heavily on the UK/Western Europe results – RSA wrote down a £57m loss there in the first-half).

But excluding Ireland, total current year underwriting profit was a healthy £87m in the first half, up slightly even from the first six months of 2013 (£80m), so there are definitely signs a corner may have already been turned. “Strategic focus through disposals and balance sheet strengthening are going well. Neither process is complete, but they are on course to be complete within the next 12 months,” says Hester. “That means our focus is switching to the third, and most long-term, area of improvement, which is operational improvement across all of our businesses.”

In the current insurance environment, all insurance companies must walk a thin line when it comes to profitability and market-share, with prices still at rock bottom on many of the biggest lines. RSA has the added pressure of rebuilding its balance sheet at the same time, and Hester acknowledges there is a difficult road ahead.

“Clearly the insurance markets are tough and competitive. Rates are too low in some segments to make an adequate return, so everyone in the insurance markets faces a series of competitive challenges,” he says. “You can’t be focused on market share for its own sake. You have got to be disciplined. If you are not, not only do you write business that doesn’t work for your shareholders but you also divert attention away from areas in which you should be serving customers well.”

While Hester acknowledges that certain emerging insurance lines and geographies such as cyber risk and Latin America should yield higher growth rates for the company, his focus is to be as competitive as possible in the modestly growing core business areas at the heart of RSA’s portfolio.

“In the modern world you can’t run from the competition to find a market that is easier to operate in – you have to take on competition head on in your core markets and win business that way,” Hester says. “There is no shortage of opportunities for us in our existing markets and product lines if we can be better than the competition.

“The markets we are in are very big and we are already leaders in many of them. Not many companies have the existing customer base we do, and if we can make our existing customers happy we are more likely to win business from our competitors off the back of that.”

In addition to underwriting and cost-cutting challenges, Hester highlights industry evolutions such as regulatory reform and technological advancements as important additional challenges. He demands improvement in the sharpness of product propositions, effectiveness of service and responsiveness to the turnaround times expected by customers in the click-of-a-button age.

“None of this is rocket science or unique, but there are a lot of things we need to get right,” he says. “We are asking the company to operate at a higher pace and level of excellence, and that is a challenge, but one that I believe with some time, and probably some setbacks along the way, the company will step up to.”

Reputational repair:

Hester insists client loyalty has remained excellent throughout the various revelations and reparations of recent months. But RSA’s reputation has inevitably been dealt a blow. “Our retention rates across the business are virtually unchanged since before the problems,” he says, noting that the company has concentrated primarily on keeping existing customers happy rather than winning new ones since the problems surfaced.

“We have to work hard to connect better still with our customers and make sure that any turbulence is only short term. Many people have dealt with RSA their whole professional lives, and I have always found in business that customers take you as they find you, not as they read about you. If you continue to service their needs and get better as required, that is what customers focus on,” he asserts.

“When making changes in the business you have to change people, which in turn changes relationships. We are also re-establishing tighter underwriting discipline and deliberately adjusting some areas of the portfolio, so no doubt we will come out of that having taken a few knocks,” Hester adds. “But this is a fine company with fine people and great relationships. I am confident we will emerge in good shape.”

If he has his way, within between five and 10 years, RSA will have restored its reputation as “a leader in its market, viewed as excellent by customers, brokers and shareholders”. Indeed, a company of RSA’s history and stature should expect nothing less.

[loganair] 01/11/2014 22:51

RSA's Stephen Hester: back in the trenches

Stephen Hester is a man for a crisis. Having spent five years rebuilding Royal Bank of Scotland, RSA’s recently appointed chief executive is streamlining RSA after financial woes and employee fraud made 2013 a year to forget for the struggling insurance giant

“I haven’t spotted anything we do that couldn’t be done better, and that must be our ambition,” says RSA chief executive Stephen Hester, eight months after being tasked with turning around the embattled insurer in the wake of 2013’s annus horribilis.

Compared to his last job as chief executive of bailed-out bank Royal Bank of Scotland – one of the most intensely scrutinised financial leadership roles in recent times – rebuilding the balance sheet and reputation of RSA in the relative respite of the insurance industry seems fairly sedate. But it presents Hester with another test of his business mettle nonetheless.

In the insurance world, RSA is a wounded giant. Having got into serious financial difficulties in the second half of 2013, culminating in a costly fraud scandal in its Irish operation, the company was in need of a serious shake-up when Hester was appointed in February this year.

Possessing a wealth of knowledge in financial reparation – and no shortage of experience in being grilled by the media – the former investment banker brings a simple yet clear strategy to the table. His plan hinges on “cleaning the decks” of peripheral businesses in order to focus on RSA’s core products and markets, cutting costs and improving underwriting discipline in order to ensure those core business lines perform at optimal efficiency, from a strengthened capital base.

“That strategy isn’t unique, but it very much arises out of the nature of the insurance industry and RSA’s position within it. Our industry is mature, and the companies that succeed in it tend to focus on the things they are good at,” Hester explains. “They have a very disciplined and consistent dedication to day-to-day implementation and excellent execution. These are the qualities that win over the long term.

“The RSA that we envisage in five or 10 years’ time is an outstanding international general insurer, viewed as excellent by its customers, brokers and shareholders. In many respects we will look superficially like we look today – our major markets, product lines and channels are likely to be the same. The vast majority won’t change. But everything we do, we do better.”

Cracks in the balance sheet:

Hester has already taken significant strides within his first year in charge. The trickiest test is arguably the repair of RSA’s Ireland business. It was here the company reached its nadir – publicly at least – when an employee fraud scandal emerged at the end of 2013. Inappropriate collaboration by senior executives over misstated claims and the subsequent reserving charges cost the company more than £200m and resulted in the firing of Irish claims director Peter Burke and chief financial officer Rory O’Connor, and the resignation of the operation’s chief executive, Philip Smith.

The debacle left RSA Ireland significantly under-reserved and positioned too aggressively on some lines of business. The resulting losses will take time to rectify. “It’s going to take us another one to two years to get the Irish business in the shape it needs to be, and it will lose a fair amount of money this year as we repair the problems,” says Hester, who hopes the operation will return to profitability by the end of 2015 under new CEO Ken Norgrove.

“It has been a very painful episode, but the situation has been contained. As a proportion of the company, Ireland is not huge, but it has been traumatic and there have been consequences,” he adds, referring to an inevitable “tightening up” of procedures and reserving in the wake of the problems.

But, says Hester, the Irish shock was merely “the straw that broke the camel’s back”. After all, while hardly small change, the Irish losses only slightly dented RSA’s £9bn balance sheet. More troubling, he notes, was the fallout highlighted deeper-rooted reserving issues across the group.

“RSA as a group had allowed its capital resources to weaken steadily every year over a period of five years,” he explains. “It had raided the piggy bank to pay dividends and make acquisitions, and there had been insufficient focus on operational improvement. The precise issue that caused the problem [in Ireland] highlighted the bigger picture – and that bigger picture had to be fixed.”

The extent of the balance sheet problems manifested themselves in an alarm bell-ringing pre-tax loss of nearly £500m in the second half of 2013.

Through a combination of improved underwriting discipline, focusing on core markets and selling off various business units, Hester aims to get the balance sheet back in shape and paying dividends to shareholders again by the end of 2015.

The shedding is already well under way; since Hester took the helm, RSA has completed the sale of its Polish and Latvian operations, as well as Canadian broking unit Noraxis, while the company’s businesses in Italy, China, Hong Kong, Singapore, Lithuania and Estonia are all in the process of being sold at the time of writing.

The sale of so many business units has raised a few eyebrows, but Hester insists the changes are relatively superficial and RSA’s core business remains intact. “People of course tend to focus on these changes, but we are in fact selling only around 10% of RSA,” he explains.

“The changes in business footprint are not as big as some might perceive them to be, but they are important because they give us more focus and discipline. The things the majority of customers know RSA for today, they will still know us for tomorrow.”

Forsaking China may be seen by some as a defeat. So much is written about China’s huge potential and for many financial institutions it is a ‘must have’ location; being there is a statement of modernity, foresight and ambition. However, Hester is not interested in kudos. He made the clinical decision to let the China operation go because he felt RSA simply couldn’t succeed there.

“When a company has a shock, as RSA did, you have to confront some tough realities. You shouldn’t make changes for perception reasons – only because you think they will allow you to win in business terms,” he says. “China is a fantastic economy with great prospects, but from our position there we could never be meaningful – we were just too small and had no way of getting bigger.

“We made a positive selection of the markets we have the best chance to succeed in – those are overwhelmingly Scandinavia, Canada, the UK and related Western Europe, with Latin America showing good potential – and a negative selection of countries in which it wasn’t clear how we could go from a weaker market position to a strong one.”

According to Hester, the disposal process is “going better than we hoped in terms of speed, good ownership for the companies we are selling and good prices for us”, and is expected to be complete by next summer. Hester is also refreshing RSA’s management team. Describing the process as a “work in progress”, he says clients and investors should expect a mix of “familiar faces and new ones” once the reshuffle is complete.

[loganair] 15/10/2014 11:26

Life as an RSA (LSE: RSA) shareholder has been tough in recent years, as allegations of wrongdoing have significantly hurt sentiment. However, new management seems to be turning the business around, with earnings due to rise by an impressive 14% next year. This puts RSA on an enticing PEG ratio of 0.9.

Although dividends are less than historic levels, RSA is still due to yield 3.6% next year. When combined with strong growth potential, this could be enough to push shares to higher highs.

[chancer] 23/9/2014 12:32

Sanford C. Bernstein restated their outperform rating on shares of RSA Insurance Group plc (LON:RSA) in a research note issued to investors on Tuesday. The firm currently has a GBX 520 ($8.48) price target on the stock.

[p777uly] 10/9/2014 20:14

Market say yes

[hanse495] 09/9/2014 12:28

Is rsa a recovery play now?

[hvs] 04/9/2014 18:43

Lol !!!!!

Only today ?????

Hester the CITY MADE MAGICIAN.

lol !!!!!!!

[yam114] 03/9/2014 08:35

Looking good today

[p777uly] 29/8/2014 08:36

Clean balance sheet. Should be a nice recovery story. And the city love Hester ;)

[jimjones1] 08/8/2014 16:47

Just wanted to say a HUGE thank you to everyone who has helped me out so far.

This will be my final post (plea)! I just need a few more complete questionnaires so if you wish to take part please follow the link below. It will only take 2-3 minutes of your time.



Just in case you didn't catch my post earlier this week and wonder what this is all about, I am doing a master's thesis on communications within online financial communities. This questionnaire will be a source of my data.

Of course I am more than willing to share the results of the study with anyone who is interested.

Thanks again for your help.



P.S. If you have any questions, please feel free to contact me at jaw73(at)aber.ac.uk.

I confirm that all responses remain strictly ANONYMOUS and that no personal information with be associated with your responses. This study is purely for research purposes with no commercial gain to myself (unfortunately!)

[optomistic] 08/8/2014 16:22

Turning out better than it looked earlier in the day.

[chancer] 08/8/2014 10:42

Nothing makes sense anymore with sole purpose of heading south.
First dilute the number of shares and dilute the share price.

All I seem to hear is that a correction is about to take place.

Fact or fear mongering ?

[optomistic] 08/8/2014 10:19

303 mill buys 573K sells 2% Share price drop...does that make sense!

[hvs] 07/8/2014 17:07

We will learn our lessons while we fills our pockets.

Very nice.

[ncnd] 07/8/2014 15:49

Not stopping until it gets to £4:00 (80p equivalent)

[keith95] 07/8/2014 15:37

"You have to give him some time to sort the mess he inherited."

- a phrase normally used by the current coalition ....

[hvs] 07/8/2014 13:55

government have no capacity left to rape taxpayers for bailouts

And they dont go to court. Do they use a rubber though ?

[dope007] 07/8/2014 12:34

I don't see how it can be avoided. Debt levels much higher and government have no capacity left to rape taxpayers for bailouts