RSA share price surges quarterly profits come ahead of expectations

on May 5, 2016
Updated: Oct 21, 2019

Shares in RSA Insurance (LON:RSA) have jumped more than two percent in today’s session, outperforming the broader London market, after the blue-chip insurer said that its quarterly profits had surpassed its expectations. The group’s chief executive Stephen Hester meanwhile noted that the company, which was the subject of an abandoned takeover by Swiss peer Zurich Insurance last year, had now become much more valuable for “whoever owns it”.

As of 14:19 BST, RSA’s share price had climbed 2.26 percent to 480.10p, outperforming the blue-chip FTSE 100 index which has slipped marginally into the red and is currently 0.08 percent worse off at 6,107.10 points. The insurer’s shares have gained 12.52 percent in the year-to-date, as compared with a 2.15-percent dip in the Footsie.
RSA announced in a statement today that its operating profits and net attributable profits for the first quarter were strong and ahead of the group’s expectations. The company, however, posted flat net written premiums as compared with the prior-year period, reflecting the impact of the group’s disposals.

“The year has started well for RSA,” the insurer’s chief executive Stephen Hester noted in the statement. “We have laid out ambitious plans to transform operating performance, and so closing gaps to ‘best in class’ peers. We are ‘on-track’ in this journey, though with much still to do.”
Analysts have welcomed the blue-chip group’s quarterly update, with Charlie Huggings at Hargreaves Lansdown commenting that Hester’s turnaround plan at the company “appears to be working”.
“The balance sheet has been painstakingly restored,” the analysts said, as quoted by the Guardian. “The dividend has proved about as reliable as an English summer historically, but now looks more secure, given RSA’s much stronger balance sheet position.”
Bloomberg meanwhile quoted Hester as commenting that RSA had now become much more valuable for any future owner.
“Since the opportunistic approach that we received last summer the shares” are recovering, the newswire quoted RSA’s CEO as saying on a call with journalists. “We are demonstrating that we are much more valuable for whoever owns it and we will behave in shareholders’ interests in whatever situation presents itself.”
While RSA attracted a takeover bid by Zurich Insurance last year, the Swiss group subsequently dropped the offer after a price was agreed, citing problems at its general insurance business.
As of 15:09 BST, Thursday, 05 May, RSA Insurance Group plc share price is 478.55p.