RSA share price drops as group reports fall in operating profit

Shares in RSA Insurance (LON:RSA) have fallen deep into the red in today’s session, as the company posted a fall in operating profit. The update comes after the blue-chip insurer announced earlier this week that it had hired Jupiter’s chief financial officer Charlotte Jones for its top finance job.

As of 10:20 GMT, RSA’s share price had given up 4.37 percent to 503.60p. The stock is underperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.92 percent lower at 7,041.53 points.

RSA posts full-year results

RSA announced in a statement this morning that its operating profit had fallen to £517 million last year, down from £663 million a year ago, while underlying profit had retreated 33 percent to £250 million. The insurer attributed the decline in its underlying results to higher weather costs and large loss challenges in its Commercial Lines unit and especially in its London Market business.

“The results represent RSA’s first down year since 2013,” the group’s chief executive Stephen Hester commented in the statement, referring to the year when RSA was hit by an accounting scandal at its Irish division. Hester, however, reassured investors that the company believed “strongly that 2019 will show a bounce back and are taking decisive action to that end”.

Analysts on blue-chip group

Goldman Sachs reaffirmed RSA as a ‘buy’ yesterday, without specifying a price target on the shares. According to MarketBeat, the blue-chip insurer currently has a consensus ‘buy’ rating and an average price target of 642.85p.

Earlier this week, Shore Capital retained his ‘hold’ recommendation on RSA following the news of the new CFO appointment. Citywire quoted the broker’s analyst Paul De’Ath as commenting that the insurer was  ‘unique’ in its peer group due to its exposure to the “high quality markets in Scandinavia and Canada”.

As of 10:34 GMT, Thursday, 28 February, RSA Insurance Group plc share price is 503.60p.