RSA beats profit forecast, says failed Zurich sale was a benefit
(Reuters) - British insurer RSA Insurance Group P.L.C. posted a 25% rise in 2016 operating profit, beating forecasts thanks to strong performances in most of its core businesses and sending its shares to their highest in over five years.
Operating profit for the year came in at £655 million ($819.1 million), compared with a company-supplied consensus forecast of £626 million ($782.9 million).
RSA has been undergoing a restructuring program under Stephen Hester, the former head of bank RBS.
A plan in 2015 by Zurich Insurance Co. to buy RSA for £5.6 billion ($7 billion) fell through due to problems in Zurich’s business and Mr. Hester said RSA was better off alone.
“Our shareholders are benefiting significantly from not having sold to Zurich,” he told a media call on Thursday, adding there were no bids on the table for RSA, and that the firm “does not need a deal.”
RSA’s overall combined operating ratio strengthened to 94.2% from 96.9% in 2015.
Underwriting performance was strong in Britain, Canada and Scandinavia but Ireland was a “disappointment,” RSA said in a statement.
Mr. Hester joined RSA in 2014 in a shake-up following an accounting scandal in the firm’s Irish division.
RSA “has again shown real progress,” RBC analysts said in a note, reiterating their “perform” recommendation on the stock.
