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'

... can these analysts forecasts ever be taken seriously?
I don't think so!

haha - I must buy some more then.

From Wednesday:

The possible disposal of RSA's Latin America operation "could be a game changer" for the insurance group and could fetch a higher price than the £500m rumoured, according to Berenberg.

The broker, which kept a 'hold' rating, said that the potential sale could "unlock" RSA's dividend story, allowing the group to lift its payout ratio sooner than expected.

Interim Management Statement


Strategic update

Continued good progress on our Action Plan to secure strategic focus, capital strength, and sustainably improved business performance.
Completed disposals of Singapore and Hong Kong (gain on sale £109m); announced disposals of minority interest in India and our UK Engineering Inspection business.
On plan for Solvency II internal model submission in Q2. Capital ratios at Q1 are slightly up versus year end, in line with our expectations.
Costs and headcount are falling as expected. Remediation in Ireland continues.

Trading update

Core Group net written premiums of £1.5bn, up 1%1 (up 5% ex new Group reinsurance programme). Underlying trends in line with expectations across all regions.
Underwriting result seasonally subdued but largely as planned, with some variability by region.
Investment performance is on track to deliver around £380m of income in 2015.
Q1 net attributable profits a little ahead of our plans and included anticipated disposal gains.
Tangible equity £3.0bn (31 December 2014: £2.9bn).
Capital metrics at 31 March 2014: IGD surplus c.£1.9bn with coverage of 2.3 times; Economic capital surplus c.£0.9bn with coverage of 1.3 times.

Seems to be moving up yesterday and today against the general flow of FTSE presumably on sector takeover views.

Someone was in a hurry first thing to buy at 415

Anyone know what's going on with this today. I have plenty and was already planned to sell the first tranche at 441 but it's moving so fast I'm wondering if something is up

Not just today CC, it's been climbing fast from just over 390.
Not seen any news anywhere and it appears that skinny hasn't either and he always 'finds things'.
Results due 6th August, if the move is down to the results they could be very good.
Of course for us it is just a matter of wait and see ;-/

Well all I've got is very broad sector M&A rumours. See ADM chart yesterday.

And insurance premiums up 5% yoy which apparently is very closely watched.

I want to sell 20% of my holding but I keep looking at it and thinking the M&A rumours may have some substance

Spent most of the afternoon arguing with myself and eventually sold 10% of my holding just before the close very near the top of the day

Well done CC. Money in the bank. Live to fight another day. Nothing wrong with that.

It's been a terrific run, RSA just having a breather today...

On the up again today. Let's see what the papers turn up over the weekend

Statement Regarding RSA Insurance Group plc

Zurich Insurance Group Ltd ("Zurich") notes the recent market speculation in relation to RSA Insurance Group plc ("RSA") and confirms that it is evaluating a possible offer for RSA. This announcement does not amount to a firm intention to make an offer under Rule 2.7 of the Code and there can be no assurance that any offer will be made.

In accordance with Rule 2.6(a) of the Code, Zurich is required, by not later than 5.00 p.m. on 25th August 2015 to either announce a firm intention to make an offer for RSA in accordance with Rule 2.7 of the City Code on Takeovers and Mergers (the "Code") or announce that it does not intend to make an offer, in which case the announcement will be treated as a statement to which Rule 2.8 of the Code applies. This deadline can be extended with the consent of the Panel in accordance with Rule 2.6(c) of the Code.

A further announcement will be made in due course.

Canaccord note:
"An appetite we did not think was there
While we expect Zurich shareholders to be cautious in their response, reflecting managements lack of track record in a deal of this scale, and the material long tail and pension liabilities that would be brought onto Zurich's balance sheet, there would likely be material synergies, and a purchase would give Zurich a leading position in the UK, add materially to Latin American scale, and give entry to two attractive markets, Canada and the UK.
With RSA progressing slowly through its recovery, and weighed by a large pension liability, we think RSA shareholders will want an offer at a material premium, given the value on a sum of the parts basis. The funding structure would also need to be considered - Zurich listed its shares in the UK in the late 1990s when it acquired Eagle Star from BAT. With excess capital at Zurich in the low single digit billions US, something similar could be considered again, although debt funding headroom could allow for an all cash offer, on first view.
Cheap on a sum of the parts
RSA has long looked good value on a SOTP basis - we had just been sceptical as to the appetite of a large insurer to take on the whole business, and had seen the pension liability as precluding a break-up.
We estimate that, based on 2016 earnings estimates, putting top peer multiples on Scandinavia, Latin America and Canada, the implied multiple on the rest of the Group on Monday's close was 5.5x. At 550p per share, this would imply a 15x multiple on this part. On a Group basis, 550p implies 1.8x 2015E tangible book and 15x 2016E PE, both material premia to peers, but obviously not allowing for the value of any synergies.
New price target based on 10% discount to talked about offer price
We think 550p would be a fair offer for RSA, but think there must still be a material risk that no offer is forthcoming, or that part of the offer is in Zurich shares, which come under some pressure. As such, we set our new price target at 500p, a c.10% discount to the £5.5bn offer price speculated upon in the FT. 500p equates to 14x 2016E PE and 1.6x 2015E tangible book, against large cap composite peers trading 10-11x PE and 1.2 to 1.5x tangible book."

Macquarie note:
"Comparing RSA to non-UK peers we see significant upside
Zurich have announced this morning they are evaluating a possible offer for RSA. 58% of RSA group’s Net Written Premium is outside of the UK and Irish businesses. The Scandinavian (26%) peers and Canadian (22%) peer trade at more than 4x tangible book value, while the nearest Latam (10%) peer is at more than 2.5x. RSA as a group trades at 1.5x tangible book value, placing a negative value on the UK business.
RSA RoTE target and price to book too low
Many investors have argued that 1.5x tangible book value is fair given management’s target and LTIP (11-16%). However, the latter includes the restructuring in 2015 in the three year average rather than using a long term rate. We believe RSA can outperform this target, given the markets in which it operates and believe above 17% should be possible.
RSA international against peers
In this report we look at how RSA’s international businesses compare to their local peers and whether a discount is warranted. These businesses have typically underperformed local peers, however we expect this is changing. We highlight the company’s Scandinavian and Canadian businesses.
We expect RSA UK to recover in 1H
While results for the UK business have been poor in recent periods, we expect the 1H results on 6th August to be a catalyst. We see a significant improvement in the UK results. If the UK business can deliver better underwriting and cash flows results then optimism regarding the dividend and capital is likely to return.
Break-up unlikely, but purchase quite likely
As management have correctly indicated, the size of the pension scheme (£7.5bn) and buyout cost (£3.1bn) are barriers to a break-up. However, this does not apply to a larger acquirer. In our opinion, RSA is a more attractive target today due to the lower price to tangible equity and recovery in the UK business. We are increasing our target price from £4.62 to £4.91 reflecting our view of the profitability of Scandinavia and Canada. We expect Zurich could extract significant synergies and justify a price of over 500p."

The Sun is shining on me today. Glad I only sold 10% last Thursday

Well done CC - I no longer hold these, but I did have a recent S?B @405p - now closed.

"Following an announcement earlier on Tuesday from Zurich Insurance that it was evaluating a potential offer for RSA Insurance, the London-listed company said it has not held talks with or received a proposal from Zurich.

Earlier, Zurich said the announcement does not amount to a firm intention to make an offer and there can be no assurance any offer will be made.
But in an afternoon statement, the FTSE 100 company said: "RSA has not held talks with or received a proposal from Zurich and shareholders are advised to take no action."
Zurich bid or not, RBC Capital Markets said RSA is an attractive bid target. Although RSA has encountered a number of problems in its business in the last two years, it continues to have an attractive geographic split of business, said the Canadian bank."

Just imagine if one had followed this:

July 27: Panmure Gordon: Sell - TP: 385p

Statement Regarding RSA Insurance Group plc

Further to the announcement issued on 28 July 2015 in relation to RSA Insurance Group plc, Zurich Insurance Group Ltd. ("Zurich") confirms that it is likely that any offer, if made, will be solely in cash.

No disclosure under Rule 2.10 of the City Code on Takeovers and Mergers will therefore be made in relation to securities in Zurich.