Stephen Hester launches £775m rights issue in RSA overhaul
Thursday 27 February 2014
Former Royal Bank of Scotland boss Stephen Hester announced his arrival at insurer RSA by axing its dividend and launching a £775 million rights issue.
In a wide-ranging overhaul of the group’s strategy, Hester said he also planned to sell £300 million worth of assets to plug a gaping capital shortfall he believes has been growing over the past 4-5 years.
RSA shares have fallen heavily since the discovery of a £200 million black hole in its Irish business last year, which led to the departure of former boss Simon Lee in December.
The More Than owner will now focus on the UK and Ireland, Canada, Scandinavia and Latin America, suggesting disposals in other parts of Europe and Asian are on the cards.
“It’s never fun delivering disappointing news but we want to make sure this business is cleaned up properly,” Hester said. “I have done this kind of thing a lot in my career.”
As well as the planned fundraising, the company said it had also taken out a £550 million reinsurance contract with Warren Buffett’s Berkshire Hathaway to cover its liabilities.
It also plans to sell property and parts of its investment portfolio to boost its regulatory capital buffer by over £1 billion.
RSA posted a pre-tax loss of £244 million in 2013, compared to a £448 million profit last year and said it could not justify paying a dividend in light of the performance. It said its interim payout was likely to be “modest”.
Hester added: “RSA’s 2013 results are poor and we need to grasp the nettles of both underperformance and under-capitalisation. Together with a series of significant self-help measures, we believe this will put the group’s capital in the right place for the future.”
Barrie Cornes, analyst at Panmure, said: “We view the capital raise as an inevitable consequence of over distributing its dividend for the last few years in addition to the problems in Ireland.”
RSA shares fell almost 3 per cent to 99.2p.
- 1 Half of young women unable to ‘locate vagina’ and 65% find it difficult to say the word
- 2 Perez Hilton apologises for Jennifer Lawrence naked photo leak
- 3 A teacher speaks out: 'I'm effectively being forced out of a career that I wanted to love'
- 4 Mexican woman becomes world’s 'oldest person' at 127
- 5 Jennifer Lawrence 'naked sex video' will be leaked threatens 4Chan celebrity photo hacker
iPhone 6 'hidden code' could indicate sharper screens or bigger phones
Perez Hilton apologises for Jennifer Lawrence naked photo leak
Ariana Grande nude photos leak: 'These are completely fake' say singer's representatives
A teacher speaks out: 'I'm effectively being forced out of a career that I wanted to love'
Kate Upton nude pictures leak: Model's representatives 'looking into' authenticity of naked images
Rotherham child sex abuse scandal: Labour Home Office to be probed over what Tony Blair's government knew - and when
Robin Williams Emmys tribute led by Billy Crystal criticised for including 'racist' joke about Muslim woman
The Rotherham child abuse scandal is a tale of apologists, misogyny and double standards
What do immigrants really think of Britain? Polish immigrant's Reddit post goes viral
Do you realise just how foolish the UK looks?
Ashya King: Parents of five-year-old boy refused permission to visit him in hospital and denied bail at Spanish court
iJobs Money & Business
£40000 - £50000 per annum + benefits+bonus+package: Harrington Starr: SQL Impl...
£85000 per annum: Harrington Starr: Head of IT (Windows, Server, VMware, SAN, ...
£40000 - £50000 per annum: Harrington Starr: You will not be expected to hav...
£500 per day: Harrington Starr: SQL DBA/Developer SQL, C#, VBA, Data Warehousi...