RSA will have other suitors - CEO

Stephen Hester moves to reassure investors after Zurich abandons its £5.6 bn offer for the British insurer

RSA Insurance chief executive officer Stephen Hester said the company will attract bids from other suitors after Zurich Insurance abandoned its £5.6 billion offer for the British insurer. "I am sure that this company will get other approaches in the future because it's a consolidating industry and it's an attractive company, but we are not looking for approaches and we are not talking to anyone else as we speak," Hester said in a telephone interview Monday.

Hester, hired in 2014 to help the insurer restore profit and recover from an accounting scandal in Ireland, said RSA hadn’t received any other approaches since Zurich first registered its interest in the company in July. The CEO said that in the absence of another offer the insurer will continue to focus on the turnaround that had been disrupted since Zurich talks first emerged. His strategy has included a string of asset disposals. The shares tumbled 21 per cent on Monday, erasing more than £1 billion in market value after Switzerland’s largest insurer said it abandoned the offer because of losses at its own general insurance unit. The stock rose as much as 2.1 per cent to 411.6 pence as of 8:49 a.m. on Tuesday in London. The share were at 437.8 pence before Zurich announced its intention to bid for the company.

“I was surprised,” Hester said. “As far as we were concerned, until last night everything was on course. We knew that the due diligence had gone well and that nothing had come out that was alarming. It was as much as a surprise to us as it was to the market.”

Analysts including Shore Capital Group’s Eamonn Flanagan and Berenberg’s Sami Taipalus said another offer for the insurer couldn’t be ruled out with the shares more attractive since Zurich walked away.


“RSA’s share price has fallen significantly and we believe it represents significant value,” Macquarie Group Ltd. analyst Andy Hughes wrote in a note to clients on Tuesday. “We are likely to see a better dividend at the year end, given the expected better balance sheet and improving earnings.”

RSA's stock had surged by the most in almost two decades amid speculation that larger rivals, including Allianz SE, Europe's biggest insurer, and France's Axa SA may also bid for the British insurer.