viewRSA Insurance Group

RSA shares soar as shake-up nears completion

Insurer boosts annual profits by 43% and hikes dividend

RSA's Stephen Hester said its strategic restructuring was set to complete this year

Investors took cover in RSA Insurance (LON:RSA) after it posted a 43% rise in annual operating profit and more than trebled its dividend.

The stock jumped 44.9p, or 11.4%, to 439.4p as RSA said 2015 operating profit rose 43% to £523mln, an increase of 57% at constant exchange rates.

Underwriting profit lifted 437%, post-tax profit climbed 221% and the group boosted its final dividend by 250% to 7p per share.

It also reported record current year underwriting profits despite the UK floods late last year.

The firm said it had good prospects of substantial further improvement and raised its performance targets and ambitions.

RSA has been undergoing a turnaround drive under chief executive Stephen Hester, the former boss at Royal Bank of Scotland (LON:RBS).

The group received a takeover approach from Swiss insurer Zurich last year, but the interest failed to turn into a formal bid.

There was also speculation that others, such as Allianz of Germany and Generali of Italy, could be alternative suitors.

Hester said: "RSA is now a strong and focused international insurer with leadership positions in the UK, Scandinavia and Canada.

"The group's strategic restructuring will complete in 2016 as remaining contracted disposals close.

"The power of increased simplicity and focus is already helping drive better performance. RSA is well placed."

The news came after Lloyds Banking Group (LON:LLOY) pleased investors with news of higher annual profits and dividends, although it made a £2.1bn fourth-quarter provision for insurance mis-selling.

Lloyds reported underlying profit of £8.1bn, up 5% or 10% excluding TSB on a 1% rise in total income to £17.6bn. Pre-tax profit fell 7% to £1.6bn.

Senior market analyst at spread-betting firm IG, Chris Beauchamp, said: "Dividend increases are all the rage this morning, as Lloyds, RSA and St James’s Place all opt to flash their cash to keep shareholders happy."

Quick facts: RSA Insurance Group

Price: 419.9 GBX

Market: LSE
Market Cap: £4.34 billion

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