RSA Insurance Group Plc (RSA) Chief Executive Officer Stephen Hester has won shareholder backing for his 775 million-pound ($1.3 billion) share sale designed to shore up the balance sheet.
The insurer, which had 1 billion pounds wiped off its market value last year, received 95.7 percent in acceptances for its 3 for 8 rights issue at 56 pence a new ordinary share, according to a statement today. JPMorgan Chase & Co. and Bank of America Corp. are placing the remaining 59.7 million shares in the offer at 94 pence apiece.
“I am very pleased with the successful outcome,” Hester said in the statement. “Our focus is on implementing the strategic and operational changes, the targets we have set and managing RSA with clarity, determination and effectiveness.”
Hester announced the stock sale in February after less than a month on the job to help restore confidence with rating companies and avoid further credit downgrades. He replaced Simon Lee, who quit in the wake of three profit warnings in the fourth quarter and an accounting scandal in Ireland.
The 53-year-old former CEO of Royal Bank of Scotland Group Plc also scrapped the London-based company’s dividend, announced plans to sell non-core assets and tapped Warren Buffett’s Berkshire Hathaway Inc. for a 550 million-pound reinsurance policy.
Hester said in February that unless the board hired a “credible CEO” it would have been difficult for the insurer to get shareholder backing for a rights issue.
To contact the reporter on this story: Sarah Jones in London at firstname.lastname@example.org
To contact the editors responsible for this story: Edward Evans at email@example.com Steve Bailey