Investors push for sale of insurance giant RSA following profits warning

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Investors push for sale of insurance giant RSA following profits warning
Posted on : 15 Dec 2013 12:40

Group employs 1,200 people in Liverpool and has a black hole in its accounts estimated at more than £500m
Major investors in troubled insurer RSA – one of Liverpool’s biggest employers – have called on the More Than owner to consider putting itself up for sale, it is reported today.

The pressure comes after chief executive Simon Lee quit the business following its third profits warning in six weeks and growing problems in its Irish division.

RSA’s base in Old Hall Street in Liverpool city centre employs more than 1,200 people.

One national Sunday newspaper said investors in the FTSE 100 insurer have written to the company to demand that it solicit takeover offers.

Allianz, the giant German insurer, France’s Axa and the Swiss heavyweight Zurich are all mooted to be interested in the 303-year-old business.

Several other investors have called for the company to sell its Canadian business or its fast-growing operations in Latin America, where it is the biggest car insurer in countries such as Brazil and Chile.

RSA said on Friday that it will need to set aside another £130m to pay out for personal injury claims in its Irish unit, on top of £70m added previously.

With this month’s storms in the UK and Scandinavia costing it another £25m in claims, RSA warned of a further reduction in earnings for this year and an impact on next year’s dividend payout for shareholders.

Reports have suggested that RSA will scrap its annual dividend to save £240m as it looks to tackle a black hole estimated at more than £500m.

Chairman Martin Scicluna, who has taken on Mr Lee’s duties while a successor is found, has already announced a review of the group’s businesses.

However, a top 20 investor told the national newspaper that RSA should “categorically rule out a rights issue” and put itself up for sale.

He added: “Given recent events, the board should, as part of the review, solicit interest for the whole group from third parties.”

Aviva, a rival FTSE 100 insurer, is also thought to be among the potential bidders.