The 2013 full year preliminary results for RSA Insurance Group plc was announced 27 February 2014.


"3 FOR 8 RIGHTS ISSUE AT 56 PENCE PER NEW ORDINARY SHARE
Further to the announcement on 27 February of its preliminary results for the year ended 31 December 2013, RSA Insurance Group plc ("RSA" or the “Company”) today announces the launch of a rights issue to raise £773 million in proceeds (£748 million net of expenses) (the “Rights Issue”). The Rights Issue is a fully underwritten 3 for 8 rights issue of 1,380,976,863 ordinary shares of 27.5 pence each in the capital of the Company at a price of 56 pence per New Ordinary Share.
The Issue Price of 56 pence per New Ordinary Share represents a discount of approximately 40% to the closing price of 93.4 pence on 24 March 2014 (being the last business day prior to the release of this announcement) and a 32.7% discount to the theoretical ex-rights price based on the closing price on 24 March 2014."

(thanks to skinny for this article)


Bottom chart 'fast stochastic'

High risk Buy, says Questor/Telegraph:

http://www.telegraph.co.uk/finance/markets/questor/10520020/Questor-share-tip-RSA-is-a-high-risk-buy.html

RSA to hold talks on credit rating
By Alistair Gray and David Oakley of Bloomberg
"The chairman of RSA is to hold urgent talks with rating agencies this week in a bid to avert a downgrade that could further erode the scandal-hit insurer’s financial stability.
Martin Scicluna is fighting to preserve RSA’s crucial A credit rating after the group, one of Britain’s largest insurers and owner of the More Than brand in the UK, revealed last week that losses in its Irish business were greater than previously thought. The accounting scandal has prompted some investors to call on the board to consider a possible sale of the entire group."

Bit the bullet and sold mine today. I don't believe the 'bid imminent' tales. This is going to wallow for a while yet. Probably get a bid announcement tomorrow morning now, but there it is. Good luck to anyone continuing to hold.

Announcement on PWC Review of Irish Issues scheduled for 9 January

Announcement on PWC Review of Irish Issues scheduled for 9 January

RSA Insurance Group Plc announces that it intends to release the key findings of PwC’s review into the financial and regulatory reporting processes and controls within the Irish Business and the Group oversight and controls of the Irish Business at 7am on 9 January 2014. A conference call for analysts and investors, hosted by Martin Scicluna, Executive Chairman will be held at 8.15am on 9 January 2014.

ENDS

Findings of PwC and other reviews into Irish control failures and update on reserve review

RSA Insurance Group plc today announces the outcome of reviews by PwC, KPMG and RSA’s Internal Audit function into the financial and claims irregularities totalling £72m identified in Ireland in November 2013.

Independent review from PwC describes RSA Group Control Framework as appropriate in terms of structure and design.
RSA has adopted PwC’s recommendations to enhance the operational effectiveness of Group-wide assurance processes and Irish financial controls.
PwC’s work supports the Board’s view that inappropriate collaboration amongst a small number of senior executives in Ireland undermined control effectiveness over claims.
Additional assurance testing from newly appointed external auditor KPMG and RSA Group Internal Audit confirms that the financial and claims irregularities were isolated to Ireland.
RSA also confirms the impact of financial and claims irregularities and the reserve review in Ireland at £72m and £128m respectively; totalling a combined £200m and that good progress is being made on the business review announced in December.

PwC review describes RSA Group Control Framework as appropriate in terms of structure and design

Following the announcement on 8 November1, RSA appointed PwC to undertake an independent review into the financial and regulatory reporting processes and controls within the Irish business and Group oversight and controls of the Irish business. This review focused on the £72m of financial and claims irregularities identified.

The PwC review has described the Group System of Governance, which includes the Control Framework, as appropriate in terms of structure and design for an international insurance group of RSA’s size and complexity, and elements of its design compare favourably across the market. The effectiveness of the framework as it related to Ireland was weakened due to independent controls not operating effectively.

The framework is built on the good market practice of three lines of defence, is designed to have multiple reinforcing layers, with a comprehensive network of policies, clear accountability including through self-certification, a framework of business controls and a range of additional assurance processes.

The PwC report identifies some weaknesses in the local implementation of the large loss claims policy and Financial Control Policies. The controls within the Irish finance function did not operate effectively allowing inappropriate accounting for Net Earned Premium and pipeline earnings. A local programme of remediation has already begun and we continue to work with the Irish regulator, the Central Bank of Ireland.

PwC concluded that there were no obvious indicators relating to the issues identified in the Irish business that were ignored, at either Regional or Group level, and neither external audit or independent reserve review during 2013 and prior years identified the specific issues that have led to the reported losses in our Irish business.

The PwC report makes a number of recommendations including conducting a review into the verification of policy adherence, enhancing the clarity of control standards and effectiveness of local implementation, and improving the balance of trust, integrity and accountability with challenge and independent verification.

These recommendations have already been incorporated into a refresh of assurance processes across the Group, many elements of which were already underway, and we will continue to engage with the UK Prudential Regulation Authority as this work progresses.

PwC work supports the Board’s view that inappropriate collaboration relating to claims irregularities amongst a small number of senior executives in Ireland undermined control effectiveness

The PwC review of electronic documents of circa 60 individuals has identified documentary evidence that supports the Board’s view that there has been inappropriate collaboration involving a small number of senior executives in Ireland. Specifically, this evidence suggests that certain individuals acted in such a way as to intentionally circumvent parts of the existing Control Framework.

In particular the large claim reserving policy was circumvented. By so doing, financial records did not fully reflect the financial position of the business and reports made to Group and Regional Management were inaccurate and potentially misleading. This undermined the effectiveness of controls which placed significant reliance on senior management integrity.

Additional KPMG and Group Internal Audit assurance testing completed with no material issues identified elsewhere in the Group

In order to further establish that the financial irregularities encountered in Ireland have not occurred elsewhere we commissioned extensive additional work from our auditors KPMG and also our own Internal Audit department.

The KPMG work, which extended to 29 territories, was an early commencement and deepening of the work to support their year-end audit to test that certain balance sheet items, and income recognition, have not been inappropriately accounted for as occurred in Ireland. We have now received their report and on the basis of the findings, we are satisfied that these issues have not been repeated elsewhere in the Group.

Group Internal Audit was commissioned to examine the effectiveness of controls over Large Loss Case Reserving. That report, which covers 20 territories, has been received. It concludes that those controls are adequate and effective, and found no evidence of suppression of, or delays in adjusting, large claims reserves.

Martin Scicluna, RSA Executive Chairman said:

“The issues which emerged in our Irish business in 2013 were completely unacceptable and I have made it my personal priority to ensure that this never happens again. The Board is now confident that the financial and claims irregularities were isolated to Ireland and do not reflect the quality of our control framework elsewhere in the world.

“Our investigations have confirmed that the claims irregularities in Ireland were, in large part, the result of deliberate collaboration between a small number of executives there. These actions do not reflect the culture, ethos and values of our business that have served us well. We acknowledge that there are lessons to be learnt and we are tightening elements of our Control and Financial Framework in response to these events.

“The Board has always believed that the Group’s Control Framework is comprehensive and appropriate. The work undertaken by PwC, KPMG and our own internal audit team has been valuable in providing comfort to the Board, and we hope to our shareholders and regulators.”

Impact of financial irregularities and reserve review in Ireland confirmed at £200m

During Q4 2013, RSA announced a total of c.£200m of losses within RSA Insurance Ireland. These losses comprise:

£72m arising from irregularities within the claims and finance functions, as announced previously on 8 November 20132. These losses were the focus of the PwC investigation and comprise:
£37m from inappropriate collaboration on large loss and claims accounting; and
£35m primarily from inappropriate accounting for net earned premiums and pipeline earnings.
£128m from the completion of the internal reserve review of the Irish Business, announced on 13 December 2013. These losses comprise:
£62m relating to reserve strengthening for business written in 2013, of which c.80% is due to adverse bodily injury claims trends; and
£66m relating to reserve strengthening for business written in previous years, of which 70% is due to adverse bodily injury claims trends.
The end of year Group reserve review is currently underway and we will report its findings as normal in our preliminary results in February.

Business update

Following his appointment as Executive Chairman on 13 December, Martin Scicluna commenced a review of the business with the objectives of improving the capital strength of the Group, optimising the Group’s business portfolio and delivering a sustainable dividend into the future. The review is ongoing.

During December 2013, the Group suffered further weather losses from an ice storm in Toronto on 20 December and severe flooding in the UK and Ireland over the Christmas period. It is too early to quantify losses from these events but they will impact the 2013 result.

Within the context of the overall 2013 results and the Board’s desire to improve RSA’s capital position, the impact of this further extreme weather in December 2013 will be taken into consideration in the Board's dividend decision in February.

The search for a new Group CEO is progressing.

Following an internal disciplinary process, the RSA Ireland CFO, Rory O’Connor and the RSA Ireland Claims Director, Peter Burke, were dismissed for their roles in relation to large loss and claims accounting irregularities. Both dismissals were confirmed yesterday following the completion of appeal processes. The disciplinary processes ran parallel to and independent of the PwC review.

Martin Scicluna, RSA Executive Chairman concluded:

“The underlying business continues to perform in line with our expectations and I am making good progress on the review of the Group. The Board and I remain confident that RSA will re-emerge as a stronger group during 2014.”

ENDS

Deutsche Bank Hold 97.95 97.95 92.00 92.00 Reiterates

JP Morgan Cazenove Neutral 97.95 97.95 109.00 109.00 Reiterates

Barclays Capital Underweight 99.00 97.95 - 100.00 Retains

The 2013 full year preliminary results for RSA Insurance Group plc will be announced at 7am on 27 February 2014. There will be an analyst and investor presentation commencing at 08:15 on the day.

RSA Ins Grp Stephen Hester appointed RSA Group Chief Executive

Thanks for the chart skinny...a good picture to close the day on.

Better things for RSA now we hope under the care of Stephen Hester.

18,740,000 in the UT @99p - bodes well!

Mmmm nice.

Is the divi safe , that should underpin the price ?

Dil,
divi being safe is far from certain this year.

Cheers skinny I'll give it a miss for now although the chart looks encouraging.

Canaccord Genuity Hold 99.28 95.85 85.00 95.00 Upgrades

I have got this marked in at 110 in short term and 120 medium term, but like to see it wander thro' 105 first.

Wonder what Hestor will get up to.

Bank of America Merrill Lynch Neutral 98.98 98.85 - 105.00 Reiterates

RSA Insurance Group plc - Response to Press Speculation

Response to Press Speculation

RSA Insurance Group plc notes the recent press speculation regarding a potential Rights Issue.

RSA is considering measures to strengthen its balance sheet, including raising capital by way of a Rights Issue, however no final decision has been made by the Company at this time.

Further details will be given when appropriate.

RSA’s 2013 full year preliminary results and update on the current business review will be announced on 27 February 2014.

-ENDS-

Final Results

RSA ANNOUNCES 2013 PRELIMINARY RESULTS, NEW STRATEGIC ACTION PLAN AND PROPOSED RIGHTS ISSUE

Disappointing 2013 headline results with pre-tax loss of £244m but normalised2 pre-tax profit of £427m

Net written premiums up 3% on constant exchange rate basis to £8.7bn
Weather charge of 3.5% of premiums; significantly higher than five year average
Irish underwriting loss of £220m from management irregularities, reserve strengthening and Q4 adverse weather
Group underwriting profit of £57m (20121: £358m); normalised2 underwriting result of £309m
Investment income of £493m (2012: £515m)
Goodwill and software intangibles write downs of £331m
IGD surplus at 31/12/13 of £0.2bn, ECA surplus of £0.7bn; Adjusting for impact of proposed rights issue, IGD surplus at 27/02/14 expected to be c.£1.3bn with coverage of 1.8 times
Strategic action plan including £775m rights issue

UK & Ireland, Canada, Scandinavia and Latin America to form core of the Group going forward
Extensive business improvement plans in train focused on portfolio actions and expense efficiency
Certain disposal processes have already commenced targeting c.£300m proceeds in 2014
Capital actions to reduce equity and property exposure and execute new reinsurance structures complete
Independent review of reserves complete. Conclusion that reserves are in a reasonable range
Our own assessment of margin in reserves at 31/12/13 is 5.0%
Proposed rights issue to be launched with the aim of raising £775m
Impact of 2013 results means final dividend cannot be justified

Barclays Capital Equal weight 102.20 102.20 99.00 102.00 Retains