RSA share price: Company to sell Italian business

on Oct 17, 2014
Updated: Oct 21, 2019
Listen, Friday, October 17: RSA Insurance Group plc (LON:RSA) has agreed to sell the entire business of the Italian branches of Royal & Sun Alliance Insurance plc and the Sun Insurance Office Limited to ITAS Mutua.

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As of 12:56 BST, RSA’s share price had lost 0.27 percent to 446.70p.
**Sale of Italian business**
RSA said in a statement release today that it would sell the entire business of the Italian branches of Royal & Sun Alliance Insurance plc and the Sun Insurance Office Ltd, which together represent RSA Italy, to ITAS Mutua.
According to the deal terms, the UK insurer will pass £434 million of liabilities to ITAS and receive a payment of £19 million. The company expects to book a £28 million gain on the transaction and an addition of around £8 million to the firm’s tangible net assets. The group also estimates a positive impact to its capital surplus of about £50 million.

RSA Italy underwrites both personal and commercial insurance risks and accounted for £221 million of net written premiums and a £1 million underwriting loss in RSA Group’s 2013 financial statements.
Completion of the deal, which is subject to obtaining regulatory approval, is scheduled for the second half of 2015.
Commenting on RSA’s latest disposal, the group’s chief executive Stephen Hester said: “This transaction continues the excellent momentum of our announced disposals in 2014 and represents further progress in tightening the strategic focus of the group.”

**CEO’s turnaround plan**
The sale of RSA Italy comes after eight months of assets sales for Hester, who is trying to shore up the insurance company’s balance sheet, which was hit by an accounting scandal in Ireland last year. RSA has already disposed of businesses throughout Asia, the Baltics, Poland and Canada, raising more than £600 million.

In August, the group announced the sale of the insurance business of each of its branches in Singapore and Hong Kong to Switzerland-based Allied World Assurance Company (NYSE:AWH). The deal was valued at about £130 million, payable in cash. ()

The FTSE 100-listed insurer still owns units in several countries in Europe, as well as in the Middle East, India, Canada and Latin America.
**Analysts on RSA**
According to the Financial Times, as of October 10, 2014, the consensus forecast amongst 54 polled investment analysts covering RSA Insurance Group plc has it that investors should hold their position in the company. This has been the consensus forecast since the sentiment of investment analysts deteriorated on January 12, 2012.
The 21 analysts offering 12 month price targets for the UK insurance company have a median target of 480.00p, with a high estimate of 574.00p and a low estimate of 388.00p. 
Analyst Ratings Network reports that RSA’s stock currently has a consensus ‘hold’ rating and an average target price of 364.50p.
RSA is expected to release its third-quarter interim management statement on November 6.
**As of 13:41 BST, buy RSA shares at 447.80p.**
**As of 13:41 BST, sell RSA shares at 447.50p.**


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