Rsa Insurance Group Ld Share Discussion Threads

[chancer] 01/8/2015 13:26

Jul 31, 2015 - 18:43


(Bloomberg) -- Zurich Insurance Group AG is raising financing ahead of a possible takeover offer for RSA Insurance Group that could come as early as next week, according to people familiar with the matter.


The Swiss insurer is talking to banks about raising more than $4 billion, said two of the people, who asked not to be identified because the information is private. Zurich Insurance hasn’t made a final decision and is still discussing options with adviser Morgan Stanley, the people said.

[cc2014] 31/7/2015 12:50

Hope quiet means Zurich are busy using their calculators. Best strategy for them would seem to be to launch a big at a high price and knock out any competition.

Price action suggests nothing is going to happen before Monday.

[optomistic] 31/7/2015 12:21

...It's all very quiet, even the newspapers showing little interest in the situation!

[loganair] 30/7/2015 20:18

A cash offer for RSA from Zurich at 550 pence per share would be a “fair offer” according to Canaccord. The investment bank’s analyts said, however, that while Zurich has access to sufficient excess capital “in the low single-digit billions”, part of any offer could come in the form of Zurich shares, which could come under some pressure as a result of the bid.

Panmure analyst Barrie Cornes was quoted as saying other bidders for RSA might now emerge: “AXA or a number of other US and European insurers could be interested,” Bloomberg reported.

Analysts were concerned, however, about the extent of RSA’s pension liabilities that would transfer to Zurich’s balance sheet.

Canaccord said Zurich shareholders are likely to be cautious about “the material long-tail and pension liabilities that would be brought onto Zurich’s balance sheet”.

Barclays said RSA’s pension deficit of about £500m should be managable by Zurich, whose own scheme has a deficit of about $2bn: “So Zurich has significant experience of managing UK pension issues,” the bank said.

Cannacord said RSA would give Zurich a leading position in the UK, add materially to its Latin American business, and give access to the Canadian market.

RBC Capital Markets pointed to RSA’s strong market positions in the UK, Scandinavia and Canada.

[fludde] 30/7/2015 19:04

In response to your question that does not need a reply, no I do not personally know the RSA directors. Hope that helps. Are you trying to imply you do know the directors of RSA? Please feel free to reply.

[gutterhead] 30/7/2015 17:18

It's a general comment. I understand how owning shares works as a holder and a director.
You don't know the rsa directors then? No need to reply

[fludde] 30/7/2015 15:56

“How do you know that for sure?” It is not presented as fact it is presented as opinion borne of many years of experience owning shares in companies that are bought and sold. Directors are not altruistic and would only fight for the highest share price if they owned significant numbers of shares and there were no other benefits to be taken into consideration. Similarly they would fight against a company sale if it were in their best interests to do so.

[gutterhead] 30/7/2015 14:05

How do you know that for sure? That's a very negative view but if they do recommend to buy or sell as a shareholder themselves, what's wrong with that.
No need to reply.

[fludde] 30/7/2015 13:28

If Zurich do make an offer the recommendation from the board will depend entirely on what the Directors can get in terms of compensation/shares/directorships and not what the share price offered will be.

[dutch123] 29/7/2015 22:23

Zurich Insurance Group (ZURN.VX) said that any offer it might make for British rival RSA (RSA.L) would likely be in cash, a day after it said it was weighing a bid.

The bid by the cash-rich Swiss firm for RSA Insurance Group could top $8 billion (5.10 billion pounds), a further example of consolidation in the sector at a time of tighter regulations and toughening market conditions.

"Zurich Insurance Group Ltd confirms that it is likely that any offer, if made, will be solely in cash," Europe's third-largest insurer said in a statement.

According to analysts, Zurich would shell out $3 billion in surplus capital, issue up to $3 billion in debt, and seek to raise another $3 billion in equity to finance the acquisition.

A spokesman for the Swiss insurer didn't comment on specifics of financing should the deal, which analysts are broadly supportive of, come together. RSA said it had held no talks with Zurich and received no proposal.

Zurich's financial adviser is Morgan Stanley. Goldman Sachs and Robey Warshaw are preparing to work with RSA, according to a source familiar with the matter.

"The potential acquisition of RSA is an attractive option for Zurich, in our view, assuming it can achieve a reasonable price," analysts with German bank Berenberg wrote in a note to clients.

Analysts at Jefferies said a deal with RSA would vault Zurich into the leader's seat in commercial insurance in Britain as well as access to the lucrative Swedish market.

However, a potential tie-up with RSA is fraught with risk for Zurich, a 45 billion Swiss franc ($46.65 billion) group offering a range of life and general insurance products.

Zurich has been a cautious predator of late due to a mixed record on earlier deals.

Zurich has pledged to pay out its excess cash by next year and must convince investors that the merits of an RSA deal would prove greater than a pure cash payout.

Investors sent the Swiss insurer's shares down 1.8 percent on Tuesday on the news. On Wednesday, the stock was 0.2 percent lower in a broadly higher European sector .SXIP.

RSA shares were down 0.5 percent to 516.1 pence at 1458 GMT, after rising more than 18 percent on Tuesday.

[loganair] 29/7/2015 16:50

Barclays analysts said in a note that the Zurich bid looked "very credible to us".

They said it "puts a number of interesting considerations on the table, not least the importance for RSA to grab the opportunity from the most credible bidder."

Germany's Allianz and Italy's Generali had all been mentioned as possible suitors.

[chancer] 29/7/2015 14:22

Further to the announcement of 18 February 2015, RSA Insurance Group plc (RSA) today announces the completion of the sale of its 26% holding in Indian insurer Royal Sundaram Alliance Insurance Company Limited to Sundaram Finance Limited, its majority stakeholder. RSA received proceeds of £46m and expects to recognise a profit on disposal of approximately £17m

[loganair] 29/7/2015 08:28

Analysts predicted that rival bidders could emerge. Zurich has until 25 August to make a firm bid for the company.

Barrie Cornes, an analyst at Panmure Gordon, said. “We believe that others will now place the slide rule over the company that has for many, many years been a perennial takeover story. We think that Axa or a number of other US and European insurers could be interested.”

Mr Hester, who has been linked recently with the vacant top job at Barclays, has also sold off businesses in areas including Hong Kong, Poland and Canada to shore up RSA’s balance sheet, although a rumoured sell-off of its £500m Latin American business has not materialised.

Experts believe Zurich’s unexpected move has been prompted by RSA’s vulnerable position as well as low premium rates across the global industry and continued low investment yields.

Any buyer will, however, have to contend with a number of problems at RSA, including its pension deficit, an ongoing inquiry by the Financial Reporting Council and a legal battle with the former head of its Irish business, Philip Smith.

Zurich has said it has $3bn ($1.9bn) in excess capital that it will return to shareholders if it cannot find any suitable takeover targets.

[loganair] 29/7/2015 08:22

blue - Offer reporting to be either 550p or 575p as any higher will not be earnings enhancing for Zurich.

It would have to be for cash otherwise RSA share holders would have to accept Zurich shares on the Swiss stock exchange or Zurich would have to go for a UK listening as happened with Santander and Abbey National, so cash it is.

[blueteam] 29/7/2015 07:25

Cash deal sounds good, £6.50 still the target and that's without others bids coming in.

[dutch123] 29/7/2015 07:10

better option than a mixed bag....

[skinny] 29/7/2015 07:09

Further to the announcement issued on 28 July 2015 in relation to RSA Insurance Group plc, Zurich Insurance Group Ltd. ("Zurich") confirms that it is likely that any offer, if made, will be solely in cash.

No disclosure under Rule 2.10 of the City Code on Takeovers and Mergers will therefore be made in relation to securities in Zurich.

[alimo] 29/7/2015 01:05

Probably worth 10000p going forward ......loss of major asset to UK economy ....

[diku] 28/7/2015 21:33

But wasn't the price of RSA going down under the watch of Hester?...it only rose today of a possible bid....so is Hester really that good at his job?....or did he actually facilitate the possible bid approach few weeks ago?....

[mr.elbee] 28/7/2015 21:17

grammar school boy whose face doesnt fit

[loganair] 28/7/2015 21:10

RSA's takeover would free up Stephen Hester for another top job:


The former RBS boss has spent 18 months raising capital, stripping out disappointing parts of the business and convincing investors that RSA was worth keeping in its current form after a hat-trick of profit warnings and a major accounting hole in Ireland.

If a deal can be agreed at the rumoured 550p price, Mr Hester will have delivered a rise of almost 30pc since he came into the role, despite a struggle to reach targets on dividend growth and return on equity.

The company has been under scrutiny as a bid target since Cevian Capital, the activist investor chaired by former City minister Lord Myners in London, started building a 9.7pc stake last year.

Cevian, now RSA’s biggest investor, kept its own counsel on the day the deal was announced, but analysts seemed in agreement that the mooted takeover price would be a fair one, given the risks still facing the ongoing turnaround work.

A takeover would give the £30bn Swiss firm access to more retail and big ticket insurance in the UK, as well as a burgeoning Scandinavian market.

Zurich has called earlier than some expected, but Hester’s strategy since February 2014 could almost have been designed to declutter RSA and attract a bidder. He launched a rights issue at the outset to buy himself some time, and negotiating room, during a disposal programme. But then he dispatched small units overseas at impressive speed: the Baltics, Poland, Thailand, China, Singapore, Italy and India have gone.

Meanwhile, the Irish business has been detoxified after its reserves scandal. Outsiders can now see the attractive parts – the UK, Canada and the Scandinavian operations – more clearly.

Perhaps the ideal time to sell would be after another round of self-help measures, meaning cost-cutting. But Zurich is at the door now and the capital demands for all insurers are under regulatory review. Hester will know that the bulk of his shareholders expect him to do his duty: talk to the Swiss and see if the likes of Axa and Allianz wish to play. One bidder is nice; More Than one would be better.

Investing stalwarts UBS, Blackrock and Norges Bank appear near the top of the shareholder register for both RSA and Zurich, which should mean that the deal satisfies both sets of owners before the 305-year-old insurer can be walked off the London market. Those in the industry pointed to Axa, US insurers and private equity as possible counter-bidders.

But what will become of Mr Hester, if a takeover goes through? Few expect him to stick around under a new owner, where his turnaround strategy would inevitably play second fiddle to the larger firm’s growth ambitions.

If Zurich can do a deal quickly, Mr Hester could even be freed up to put in a CV for the top job at Barclays. Unlikely as the return to running a large bank might sound, he has previously crossed paths with Barclays executive chairman John McFarlane on the board at post-bail-out RBS.

Most of Mr Hester’s career has been spent as an investment banker at Credit Suisse, giving him the experience needed to reignite the most troubling unit of Barclays. Surely it’s enough to get him on the long-list, at least.

[gutterhead] 28/7/2015 19:59

Bought a month ago, sold today, thought they looked good value, pure luck ref the rumours and statement today.
will probably buy again in next few weeks. This could be all over the place on rumours etc with more opportunities. good luck to all.
Gh

[dutch123] 28/7/2015 19:48

hopefully it may become a bidding war as loganair said..hopefully.

[diku] 28/7/2015 17:50

Wonder if some in the know already took positions early July when price was around 400p!!.....how it quickly rose to 450p...and then today the news of a possible interest in making a bid...

[bigman] 28/7/2015 17:30

tempted to take a bit off the top, just to make sure i crystallise some profit, can't be too gready and i have done really well here, just don't want some silly thing like i had with a water company that fell all the way back when not sold.