Thursday 21 September 2017

Insurer RSA bounces back to profit following accounting scandal

Stephen Hester, the CEO of embattled insurer RSA, said he's
Stephen Hester, the CEO of embattled insurer RSA, said he's "very relaxed" about the long-term future of the company's Irish operations
Donal O'Donovan

Donal O'Donovan

Insurer RSA bounced back to profit last year after scrambling to get to grips with a costly accounting scandal at its Irish unit in 2013.

The UK based insurer has been trying to turn itself around after posting losses in 2013 following a series of weather-related claims and the discovery of a €274m (£200m)  hole in the accounts of its Irish unit.

 RSA hired former Royal Bank of Scotland boss Stephen Hester following the exit of Simon Lee at the end of 2013.

The firm announced further cost-cutting and the departure of its chief financial officer today.

Hester, who joined a year ago after the resignation of former CEO Simon Lee, set out plans last year to raise up to 1.6 billion pounds ($2.5 billion) in capital, tapping shareholders for nearly half and making up the rest from disposals and money saved by scrapping the dividend.

He said current challenges include the record low yields on government bond - which are hurting investment returns.

"The impact of lower interest rates and exchange rate moves hurts insurance companies and hurts us," Mr Hester told Reuters on Thursday.

"The insurance market is probably ... a more price-sensitive place than a year ago."

RSA posted a pre-tax profit of 275 million pounds, it said in a trading statement, compared with a 244 million pound loss a year earlier. The results came in slightly below the 299 million pounds forecast in a poll of analysts supplied by the company.

The insurer said it would restart dividend payments with a modest 2 pence final dividend, well below a forecast of 6.25 pence.

RSA's shares fell more than 3pc in early trading yesterday before trimming some losses to stand 2.5pc down at 439 pence a share.

(Additional reporting Reuters)

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