RSA’s Hester Says Targets Remain on Track After Bid Distractionby
RSA Insurance Group Plc, the subject of a now abandoned 5.6 billion-pound ($8.6 billion) takeover bid, is “more than on track” to meet its full year financial targets after an increase in premiums, according to Chief Executive Officer Stephen Hester.
Net written premiums increased 1 percent in the first nine months of the year to 4.4 billion pounds, RSA reported Thursday. Premiums were up 4 percent in Scandinavia and 2 percent in the U.K., although they fell 4 percent in Canada and 5 percent in Ireland. The shares climbed the most in more than two months in London.
RSA was trading near a two-year high after Zurich Insurance Group AG made an initial 550 pence a share offer for the London-based company in August. The stock slumped when the Swiss firm was forced to walk away from the deal after reporting losses at its own general insurance unit.
“The Zurich distraction was a bump in the road rather than anything more in terms of impact on our business,” Hester said in a telephone interview. “We can’t give a guarantee that it won’t happen again, and in a consolidating industry like insurance the chances might be higher. We are not soliciting a deal.”
Hester, hired in 2014 to clean up the balance sheet after an accounting scandal in Ireland, said in September he expects RSA could attract more suitors. It was “a safe bet” that nobody has come forward after Zurich walked away, he said Thursday, adding that the bid had some impact on premiums in its commercial business.
While premium growth is expected to remain muted, the next two years will see “further substantial profits increases” and dividend growth, Hester said.
The shares rose 3.2 percent to 428.4 pence at 1:19 p.m. in London, the biggest advance since August 25.