World News – GB – RSA shares soar 45% on buyout approach


Shares of insurer FTSE 100 surged after announcement of approach by Canadian and Scandinavian insurers

RSA shares soared 45% following a possible 685p takeover offer from a transatlantic consortium of insurers

The insurer confirmed after market close on Thursday afternoon that it received an approach on October 2 from Intact Financial, a Canadian insurer, and Tryg, a Scandinavian company

The consortium did not file a formal offer, but shares jumped to 670 pence, valuing the company at nearly £ 7bn The stock traded at around 450p earlier on Thursday

The approach was revealed just hours after RSA revealed that a drop in complaints from customers staying at home during the pandemic helped offset lower sales in the third quarter

Insurer FTSE 100 says declining economic activity has led to a drop in non-Covid claims between 8% and 36% in its business divisions

Insurers have reported fewer claims on products like auto insurance as customers have stayed off the road due to working from home and social distancing

RSA said it has shared the benefits of reduced claims with customers through reliefs worth £ 156million such as premium discounts

The company sold £ 4.7bn of insurance in the first nine months of the year, 3% less than a year ago The company blamed the fall on Covid-19

UK and international sales fell 6% to £ 2 billion, far less than the company’s performance in Canada and Scandinavia

The reduction in claims helped offset weak sales and raised its combined ratio – the percentage of premiums paid on claims and administrative costs – to 90% Insurers are making money on policies they they sell if the ratio is less than 100%

« While Covid-19 has held back our profits overall, the inherent strength of RSA and the improvements we have made are making the business move forward in a pleasant way The outlook for continued improvement in underwriting remains positive, ”he said

The company has downgraded the expected cost of the High Court judgment in the industry shutdown case by £ 20million

RSA said in September it planned to pay an additional £ 104million due to the case on top of the £ 57million it had already set aside The revised estimate is unlikely to affect the business as reinsurers would have borne the cost of the additional claims

Investec analyst Ben Cohen said the company may be able to pay its canceled dividend for 2019 alongside future distributions to shareholders

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R S A, Intact Financial Corporation, Underwriting Profit, Finance

World News – GB – RSA shares soar 45% in approach to buyback


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