Irish insurance competition concern as RSA faces €7.9bn takeover and break-up bid

Peter Boland, director of the Alliance for Insurance Reform.

A proposed €7.9bn global takeover and break-up of insurance giant RSA has raised concerns about the implications for competition in the Irish insurance market.    

RSA is one of the six main players in Ireland, but trails Axa, Aviva, Allianz, FBD, and Zurich in terms of market share. 

Peter Boland, the head of the Alliance for Insurance Reform, which campaigns for lower premiums by reducing the amounts paid out in legal-damages claims, said there is a concern, should the RSA takeover lead to less competition here.  

However, the Irish Government still has the chance to drive reform by reducing general awards damages and to attract more firms back to the Irish market, Mr Boland said.         

The Government has pledged to boost competition and has sought to attract insurers that had withdrawn from the market in recent times. Mr Boland said he welcomed the second report by the Central Bank on costs and profits of the insurers, which was published earlier this week.  

RSA is in talks with a consortium of Canadian insurer Intact Financial and Danish insurer Tryg about a possible break-up deal that values the firm at about £7.2bn (€7.9bn).

RSA has hired Robey Warshaw, Goldman Sachs, and Bank of America to advise on the deal, which comes five years after a previous attempt to merge with Zurich Insurance fell through in 2015.

Both Intact and Tryg have been mooted as potential bidders since then, with former Tryg CFO, Christian Baltzer, taking the helm of RSA’s Danish business last year.

RSA chief executive Stephen Hester, a former boss of NatWest who joined RSA in 2014, shored up the company’s balance sheet with a £773m (€811m) rights issue and scaled back underperforming business.

Rising commercial insurance rates, lower non-pandemic related claims, and a tightening up of its underwriting strategy boosted RSA's underwriting profit in the first nine months of 2020, despite the impact of Covid-19, it said earlier.

RSA's combined ratio (a measure of performance in which a level below 100% indicates a profit) stood at 90% in the third quarter, compared with 93.6% at the end of 2019.

Additional reporting: Reuters