RSA's (RSA) nasty looking loss for 2013 reflects such issues as well-flagged under-reserving in Ireland and above-trend weather claims. Indeed, RSA suffered a £293m weather hit in 2013, most significantly from Canada; just £14m related to UK storms and flooding. But that’s all of secondary importance compared to new chief executive Stephen Hester’s plan to tackle the capital shortfall.
He announced a £775m rights issues, axed the full-year dividend, and will raise £300m in 2014 from selling non-core operations. RSA will focus on core regions (Canada, Scandinavia, Latin America and the UK & Ireland) with disposals initially coming from such regions as Asia and the Middle East. Some £550m has already been found through increased reinsurance cover (which cuts capital requirements), the sale and leaseback of its Swedish headquarters and the disposal of the equity book.
The combined ratio (of claims to premiums) did fall 4 percentage points but, at 99.6 per cent, the group just about remained profitable at the underwriting level. Premium rates are generally holding up, too, with single-digit price increases seen in most business classes. Some £45m-£60m of UK weather losses have been registered since the start of 2014, however.
Deutsche expects adjusted EPS of 4.4p this year (up from a 9.8p loss in 2013), and net tangible assets (NTA) of 62p.
RSA INSURANCE (RSA) | ||||
|---|---|---|---|---|
| ORD PRICE: | 95.6p | MARKET VALUE: | £3.5bn | |
| TOUCH: | 95.5-95.6p | 12-MONTH HIGH: | 131p | LOW: 78p |
| DIVIDEND YIELD: | 2.4%† | PE RATIO: | NA | |
| NET ASSET VALUE: | 79p* | COMBINED RATIO: | 99.6% | |
| Year to 31 Dec | Gross premiums (£bn) | Pre-tax profit (£m) | Investment return (£m) | Dividend per share (p) |
|---|---|---|---|---|
| 2009 | 6.74 | 554 | 616 | 8.25 |
| 2010 | 7.46 | 474 | 629 | 8.82 |
| 2011 | 8.14 | 613 | 745 | 9.16 |
| 2012 | 9.40 | 327 | 534 | 7.31 |
| 2013 | 9.82 | -338 | 527 | 2.28† |
| % change | +4 | - | -1 | -69 |
Ex-div:- Payment:- *Includes intangible assets of £1.1bn or 30p a share †Half-year dividend only | ||||
