RSA Reports 84% Jump in 1st Half Operating Profit

By | August 7, 2015

RSA Insurance Group plc, the subject of a potential takeover bid by Zurich Insurance Group AG, reported a jump in first-half profit that beat analyst estimates and restored the interim dividend.

Operating profit rose 84 percent to 259 million pounds [$395.2 million], London-based RSA said on Thursday. That compares with the 231 million-pound [$352.5 million] average estimate of 13 analysts provided by the company. Interim dividend was reinstated at 3.5 pence per share.

“We are making fundamental improvements to RSA, as promised,” Chief Executive Officer Stephen Hester said in the statement. “These interim results show excellent progress on all key measures. The foundations are being laid to improve still further.”

RSA surged by the most in almost two decades last week after Zurich said it was considering a bid, stirring speculation it may attract other offers. Zurich, which also reported earnings on Thursday, said it was still considering a bid adding that an acquisition could “bring significant benefits.”

A takeover would cap a tumultuous two-year period for RSA after an accounting scandal in Ireland led to Simon Lee’s departure as CEO, a stock sale and a spate of asset disposals. Hester, the former CEO of Royal Bank of Scotland Group plc, took the reins last year.

Group net written premiums fell 3 percent to 3.4 billion pounds [$5.2 billion] as the insurer sold off units. The group combined operating ratio, a measure of profitability, improved to 96.9 percent from 100.3 percent a year ago.

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