More bids for RSA Insurance likely

RSA Insurance chief executive Stephen Hester said that the company will attract bids from other suitors after Zurich Insurance Group abandoned its £5.6bn (€7.74bn) offer for the British insurer.

“I am sure 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,” said Hester.

Hester, hired in 2014 to help the insurer restore profit and recover from an accounting scandal in Ireland, said RSA had not received any other approaches since Zurich first registered its interest in the company in July.

The chief executive said 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% on Monday, erasing more than £1bn (€1.38bn) of market value after Switzerland’s largest insurer said it abandoned the offer because of losses at its own general insurance unit.

The stock was up 0.9% at 406.99p yesterday evening, below the 437.8p trading price before Zurich revealed its intentions to bid.

“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 Ltd’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.

Deutsche Bank’s Oliver Steel said future interest for RSA could come from Asia, rather than the US or Europe.

“If Zurich couldn’t make it work, we doubt that other western insurers can either,” Steel said, who has a hold rating on the stock, in a note to clients.

“Nor do our US analysts believe that there is interest from US insurers. That leaves only the Japanese or Chinese insurers, who could be interested in building their global scale, but who wouldn’t derive any synergies,” said Steel.

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


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