Rsa Insurance Group Ld Share Discussion Threads

[fludde] 09/1/2014 13:12

Appears to have been low risk investment but high risk recruitment....

[keith95] 09/1/2014 13:10

From the 2013 half year results:

In the second half of 2013, we will continue to follow our high quality, low risk strategy. We remain comfortably on track to meet full year investment income guidance of around £470m in 2013.

[wllmherk] 09/1/2014 12:58

I would suggest a dividend or passing altogether is well priced in. As another poster suggested, passing on the dividend won't save enough cash, beginning to think a RI is looking more likely and probably best course of action. I would be interested in others thoughts on the virtue of a RI ?

wllm

[skinny] 09/1/2014 12:29

QuePassa - salient posts.

[keith95] 09/1/2014 12:23

LoL - Monty ... its a daft phrase .. markets love uncertainty ... because share prices are volatile and leads to an opportunity to make or lose 1000's ....

[montyhedge] 09/1/2014 12:13

Market hates uncertainty.

[keith95] 09/1/2014 12:06

"Lloyds will become humungously profitable based on a vastly improving UK economy. Expecting Lloyds share price to gain +++ over the coming year."

If the UK economy was really improving ... the supermarkets would not be warning about households with tight purse strings ...

What we are seeing is a lot of talk about the UK doing well with growth stemming from consumers having to pay more with fixed salaries through more expensive imported goods.

LLOY results were uninspiring last November and more importantly had a one line statement to the effect that insurance claims were below expectations ... UK storms had just hit when these results were presented ....

[keith95] 09/1/2014 11:54

QuePassa - I don't think I miss the point.

The departure of the CEO was predictable - after the two suspensions and now dismissals - we will see if that is the end of it or if there is more - but there is not much a company can do if people don't do the job they are paid to do.

Did YOU read the conclusion from today?

"The underlying business continues to perform in line with our expectations and I am making good progress on the review of the Group. The Board and I remain confident that RSA will re-emerge as a stronger group during 2014."

The major investor gripe with RSA is that it keeps most of its reserves in bond safe havens rather than stocks.

I've bitten the bullet and day traded this stock over the past few days (contrary to what I planned earlier in the week) ... but sold a few yesterday and bought a few this morning ...

Now is a good time for the take out bid ... because the company looks to have survived ... probably will survive but is weak as you say ...

If your short ... good luck!

[quepassa] 09/1/2014 11:37

You entirely miss the point.

RSA is weak. And the unexpected claims have the capacity of really hurting them. Especially when combined with all their other woes.

Many other UK general insurers will take the additional bad weather claims in their stride with perhaps a minor reduction in expected profitability.

In terms of Lloyds, going long of Lloyds will be the safe large-cap trade of the year.

And Lloyds will start paying a good dividend. HMG will sell its stake and Lloyds will be fully returned to the private sector.

Lloyds will become humungously profitable based on a vastly improving UK economy. Expecting Lloyds share price to gain +++ over the coming year.

Unlike RSA.

ALL IMO. DYOR.

QP

[keith95] 09/1/2014 11:15

Agree diku .... but your point is invariably the case with all stocks surely?


QuePassa - One of the biggest home insurers is LLOY ..... fancy going short?

[quepassa] 09/1/2014 10:48

Post 7576 refers.

they budget for claims based on statistical claims experiences and expected weather patterns.

what's been happening with the bad weather both in UK AND Canada is way beyond statistics and what they budgeted for.

this eats into their profitability and if annual profits don't cover the unexpected greater claims than budgeted for, they are forced to eat into their reserves.

They have got a perfect corporate storm ( excuse the pun):-

- The CEO left unexpectedly
- Embarrassing irregularities in Ireland
- Having to pump £200m into the Irish operations
- Awful weather in Canada where they have significant operations
- Dreadful weather in the UK
- Ratings downgrades
- A less than comfortable capital position
- Question marks over the forthcoming dividend given the unforeseen bad weather and a need to preserve/strengthen their capital base
-Potential need for a capital raising



ALL IMO. DYOR.

QP

[bbonsall] 09/1/2014 10:29

There are always events that lead to insurance claims. That is Why RSA is in business. So I don't really understand RSA bleating about having to pay for claims. If there were no claims there would be no insurance industry.
On the question of why some think the share price is too high, I read the other day that the breakup value is at least 140p per share. So a bid could come any day.

[diku] 09/1/2014 10:29

This has turned out to be buy on rumour & sell on the news...

[dope007] 09/1/2014 10:11

Agree QuePassa. RSA NAV will be sub 99p now. It should be trading at a decent discount to that. The only reason it isn't is because the markets are propped up with funny money from the central banks. If bond yields start to climb to the correct levels rather than these ridiculously low levels then there will be major problems everywhere, since debt levels are at record highs. In reality most of the developed world is utterly bankrupt and still running deficits.

[quepassa] 09/1/2014 10:03

Not convinced that a cut in or passing of dividend is yet fully priced in.

In my view, institutional income funds will start selling more holdings in RSA as dividend prospects for RSA, further blighted by today's RNS, are increasingly assessed by institutions, funds and other income-seeking investors.

ALL IMO. DYOR.

QP

[keith95] 09/1/2014 09:51

jeffian -

"I never understand why people rely on financial websites or newspapers for important information on things like shares in issue, earnings per share etc etc when these are easily available from a much more reliable source - the company's accounts or RNS updates on Total Voting Rights"

Maybe that is why RSA just lost 200 million from its reliable Irish Unit source via the auditors.......


"Following an internal disciplinary process, the RSA Ireland CFO, Rory O'Connor and the RSA Ireland Claims Director, Peter Burke, were dismissed for their roles in relation to large loss and claims accounting irregularities."


Has someone had their finger in the pie?

[dope007] 09/1/2014 09:31

Sounds like another profit warning due when they work out how much the latest weather has cost them

[jeffian] 09/1/2014 09:06

Ref #7696 et seq, I never understand why people rely on financial websites or newspapers for important information on things like shares in issue, earnings per share etc etc when these are easily available from a much more reliable source - the company's accounts or RNS updates on Total Voting Rights, e.g.

"RSA Insurance Group plc
Voting Rights and Capital
2 January 2014
As at 31 December 2013, RSA Insurance Group plc's voting capital consists of 3,681,798,995 ordinary shares of 27.5p each with voting rights. Therefore, the total number of voting rights in RSA Insurance Group plc is 3,681,798,995."

[portside1] 09/1/2014 09:00

not looking good for the div and the weather will take all the profits
will wait for 80p to buy back

[dr biotech] 09/1/2014 08:57

They are clearly going to cut or pass the dividend this year. Some of that is priced in. Its how they attempt to increase the capital that will be more interesting.

[quepassa] 09/1/2014 08:48

Putting it another way.

They already unexpectedly cut the August 2013 interim dividend by 30% from from 3.41p to 2.28p.

Last year's final dividend in February 2013 was 3.9p.

With around 3.7billion shares in issue, a similar final dividend for this year of 3.9p will cost the Company around £140million.

That's money that the Company can ill afford given management's stated desire to improve RSA's Capital position. And £140million is a chunky amount of money which would certainly assist RSA in maintaining an already struggling capital position.



ALL IMO. DYOR.

QP

[keith95] 09/1/2014 08:14

Apologies folks --- was working around ADVN while it was down earlier this morning.

5.4pps is correct.

[quepassa] 09/1/2014 08:13

It seems that the £200m had already been confirmed prior to today's press release. So no real surprises there.

But what is worrying is their reference to the as yet unquantifiable new claims related to the recent storms and floods.

They are going out of their way to flag this up and that it will be taken into account in determining this year's dividend:-

QUOTE

During December 2013, the Group suffered further weather losses from an ice storm in Toronto on 20 December and severe flooding in the UK and Ireland over the Christmas period. It is too early to quantify losses from these events but they will impact the 2013 result.

Within the context of the overall 2013 results and the Board's desire to improve RSA's capital position, the impact of this further extreme weather in December 2013 will be taken into consideration in the Board's dividend decision in February.

UNQUOTE



If they are so clearly flagging this AND flagging the Board's desire to IMPROVE RSA's CAPITAL POSITION, it seems to me that the forthcoming dividend is under great threat.

In my opinion, there seems more than a strong chance that the dividend will be slashed. If not passed in full.

On the basis of this update on bad weather claims, in my view it also makes the likelihood of further ratings agencies downgrades more probable.



ALL IMO. DYOR.

QP

[diku] 09/1/2014 08:04

Well the door is still open for an RI announcement at the next results....should that happen succesfully the company will be much stronger financially...

[uppompeii] 09/1/2014 08:02

There arent nearly 19bn shares in issues, if there are the market cap would be £19 billion ....