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RSA Soars on Report Irish Unit May Need No More Capital

RSA Insurance Group Logo Sits in London
The company logo for RSA Insurance Group Plc sits by a pedestrian crossing near the company headquarters in London. Photographer: Simon Dawson/Bloomberg

Jan. 6 (Bloomberg) -- RSA Insurance Group Plc rose the most in almost five years in London trading amid a report that the insurer’s Irish unit may require no further capital injections.

The stock jumped as much as 8.4 percent, the biggest gain since February 2009, after the Sunday Telegraph reported the London-based insurer probably won’t require further writedowns, according to a probe led by PricewaterhouseCoopers LLP. UBS AG also added RSA to its most preferred list.

“The issues faced by the company can be addressed without the need for a full rights issue or franchise damaging disposals,” said James Shuck, an analyst at UBS in London, with a buy rating on RSA. “A takeover remains a possibility.”

The shares closed at 97.9 pence, up 6.2 percent. They sank 27 percent in 2013 after the insurer issued three profits warnings in the fourth quarter and injected 205 million pounds ($336 million) into its Irish unit to help plug a shortfall.

Jon Sellors, a spokesman at RSA, declined to comment on the Sunday Telegraph report. RSA is scheduled to release findings of the PwC review on Jan. 9.

RSA Ireland Chief Executive Officer Philip Smith resigned in November amid an investigation into whether the Irish unit reported the amount of premiums paid to the company earlier than it should have and the timing of when it set aside reserves to cover insurance claims. Chief Financial Officer Rory O’Connor and claims director Peter Burke remain suspended.

RSA CEO Simon Lee resigned last month, with the insurer saying it now expects a “mid-single digit” return on equity for 2013.

To contact the reporters on this story: Joe Brennan in Dublin at jbrennan29@bloomberg.net; Sarah Jones in London at sjones35@bloomberg.net

To contact the editor responsible for this story: Simone Meier at smeier@bloomberg.net

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