RSA Shares Soar on Report Irish Unit May Need No More Fresh Capital

January 6, 2014

RSA Insurance Group Plc rose the most in almost five years in London trading amid a report that the insurer’s Irish unit may require no further capital injections.

The stock jumped as much 7.5 percent, the biggest intraday gain since February 2009, after the Sunday Telegraph reported the London-based insurer probably won’t require further write-downs, according to a probe led by PricewaterhouseCoopers LLP. UBS AG also added RSA to its most preferred list.

“The issues faced by the company can be addressed without the need for a full rights issue or franchise damaging disposals,” said James Shuck, an analyst at UBS in London, with a buy rating on RSA. “A takeover remains a possibility.”

RSA shares rose 6.4 percent to 98 pence [$1.60] at 9:14 a.m. They have dropped 23 percent over the past year.

The insurer issued three profits warnings in less than six weeks in the fourth quarter and injected 205 million pounds ($336 million) into its Irish unit to help plug a shortfall. RSA will release findings of the PwC review on Jan. 9.

Jon Sellors, a spokesman at RSA, declined to comment yesterday on the Sunday Telegraph report, saying the PwC report isn’t finalized yet.

RSA Ireland Chief Executive Officer Philip Smith resigned in November amid an ongoing investigation into whether the Irish unit reported the amount of premiums paid to the company earlier than it should have and the timing of when it set aside reserves to cover insurance claims. Chief Financial Officer Rory O’Connor and claims director Peter Burke remain suspended.

RSA CEO Simon Lee resigned last month, with the insurer saying it now expects a “mid-single digit” return on equity for 2013.

–Editors: Simone Meier, Jon Menon

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