Bid rumours over RSA push up share price

Sep 2 2008 by Alex Turner, Liverpool Daily Post

PERSISTENT market speculation of a possible bid for RSA Insurance boosted its share price by 4% yesterday.

Britain’s second-largest commercial insurer, employing about 1,300 staff in Liverpool and a further 7,700 across the UK, has been subject to rumours about a takeover bid by Switzerland’s Zurich Financial Services and Swiss Life.

The speculation, which began two weeks ago, has continued to grow, though both firms have refused to comment.

Yesterday’s share price rise in the insurer, which owns the highly promoted Liverpool based More Than general insurance brand, followed a 6% increase last Thursday. Its shares are now at their highest closing price in 2008 at 157.7p.

The original speculation surfaced on August 13 but since then, Zurich has been identified as the most likely bidder.

However Swiss Life said last week that it had not ruled out further acquisitions. Last month it spent more than £350m on stakes in German financial advisory groups AWD and MLP.

Interest in RSA Insurance grew after it appeared likely the auction of Royal Bank of Scotland’s insurance businesses, Direct Line and Churchill, would be abandoned.

RBS had hoped to raise £7bn from the sale, but the only bid, from American insurer Allstate, is believed to have been at least £1bn below the asking price.

Several parties expected to take an interest in the RBS businesses could now look at RSA Insurance. These include European insurer Allianz and Australia’s QBE.

Speculation comes at a time when premiums on core house and car insurance products are increasing, which is easing fears across the sector.

RSA Insurance, which changed its name from Royal & SunAlliance earlier this year, saw its pre-tax profits for the six months to June 30 rise 23% to £292m.

alex.turner