27 February 2014 Insurance

RSA announces £775 million rights issue against poor results

RSA Insurance Group reported disappointing annual results against the backdrop of a rights issue, which it hopes will raise £775 million.

Altogether net written premiums grew by 3 percent, while its pre-tax figures fell dramatically to a loss of £244 million in 2013 compared with profits of £448 million in 2012.

The combined ratio was 99.6 percent in 2013, compared with 96.8 percent in 2012 and underwriting results generated £57 million in 2013 compared with £358 million in 2012.

Stephen Hester, group chief executive of RSA said: “RSA’s 2013 results are poor and we need to grasp the nettles of both underperformance and undercapitalisation. As part of this we intend to launch a rights issue to help ensure we have the appropriate level of capital behind the Group. Together with a series of significant ‘self-help’ measures, we believe this will put the Group’s capital in the right place for the future. It will give us the necessary platform to focus aggressively on tightening strategy, improving customer service in core businesses and delivering operational improvements; and from these actions deliver attractive returns on a stronger tangible equity base.”

The company faced a £200 million fraud in the Irish unit last year and substantial losses related to flooding in the UK in the last quarter of 2013 and into 2014.

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