LONDON--Global multi-insurance firm RSA Insurance Group PLC
Thursday called on shareholders for GBP775 million ($1.29 billion)
to strengthen its balance sheet as it reported that its headline
operating profit more than halved and canceled its dividend.
The troubled insurance firm, which sells personal motor and
household insurance in the U.K. through its More Than brand, said
that its weather charge will be 3.5% of premiums, significantly
higher than the five-year average.
"RSA's 2013 results are poor and we need to grasp the nettles of
both underperformance and undercapitalization," Chief Executive
Stephen Hester said in his first earnings statement since his
appointment.
"Together with a series of significant "self-help" measures, we
believe this [rights issue] will put the group's capital in the
right place for the future," Mr. Hester added.
Operating profit, a key measure in the insurance industry, was
GBP286 million for the year ended Dec. 31, 2013, compared with
GBP601 million in 2013, while net written premiums were unchanged
at GBP8.66 billion.
RSA's IGD surplus, a regulatory measure that calculates surplus
capital within the group, fell to GBP200 million, from GBP1.2
billion a year earlier
RSA recently appointed former Royal Bank of Scotland chief
Stephen Hester as chief executive, replacing Simon Lee who resigned
in December after a series of profit warnings over accounting
issues at RSA Ireland.
RSA raised the alarm on potential problems in the Ireland
business in November. A subsequent review by PricewaterhouseCoopers
of the Irish claims and finance functions found signs of
"inappropriate collaboration" in accounting by RSA's top
executives. RSA said it would inject GBP135 million in capital to
RSA Ireland and boosted the unit's reserves by GBP200 million.
Its shares closed Wednesday at 102 pence valuing the company at
GBP3.76 billion.
Write to Ian Walker at ian.walker@wsj.com
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