RSA share price: ShoreCap sees group in ‘rebuilding phase’

Shore Capital continues to see RSA Insurance (LON:RSA) as a ‘hold,’ arguing that the company is still in a ‘rebuilding phase,’ Citywire reports. The comments came after the blue-chip insurer updated investors on its performance yesterday, reporting a decline in its underlying results amid higher weather costs and large loss challenges in its Commercial Lines unit and especially in its London Market business.

RSA’s share price has surged in London this morning, having gained 1.84 percent to 520.40p as of 09:53 GMT. The shares are outperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.62 percent higher at 7,118.53 points.

ShoreCap weighs in on RSA

Citywire quoted Shore Capital’s analyst Paul De’Ath, who rates RSA as a ‘hold,’ as commenting yesterday that while actions were “being taken to improve reinsurance and exit some of the riskier lines of business [...] this still wouldn’t have been enough to drive growth in the underlying earnings per share”. The blue-chip insurer’s chief executive Stephen Hester reassured investors yesterday that the company believed “strongly that 2019 will show a bounce back and are taking decisive action to that end”.

The analyst elaborated that while actions taken last year and this year should improve the picture, “these things take time and there may well be a lag effect of closing down some of the business areas, in our view”.

“We continue to prefer other options within the space that provide more stability in earnings and potential for special capital returns,” De’Ath concluded.

Other analysts on insurer

Deutsche Bank reaffirmed RSA as a ‘sell’ today, 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.

As of 10:21 GMT, Friday, 01 March, RSA Insurance Group plc share price is 520.40p.