RSA H1 pretax profit beats forecast as Zurich circles

RSA is run by chief executive Stephen Hester, the former boss at Royal Bank of Scotland, who was hired to revive the insurer’s fortunes after it was hit by a series of profit warnings more than 18 months ago. The largest purchase announced this year was Ace Ltd.’s agreement to buy Chubb Corp.in the U.S. for more than $28 billion.

RSA’s pretax profit for the six months to June 30 beat a company supplied consensus forecast for 235 million pounds, and compares with 69 million pounds in the first half of 2014 and 275 million pounds for the whole of 2014.

“We are making fundamental improvements to RSA, as promised”.

The performance contributed to RSA reinstating its interim dividend, which was cut after the Irish scandal.

The comments come after The Telegraph reported last night that Zurich’s advisers were basing their preparations for a bid at about 525p per share, lower than earlier reports of a 550p-per-share proposal, as well calls for a bid of 660p. The company said the strong results reflect excellent progress inimplementing the RSA Action Plan.

The company said the Group net written premiums were down 3 percent at constant exchange rates due to disposals, however Core Group premiums rose 2 percent on an underlying basis.

Takeover target RSA Insurance (LON:RSA) unveiled higher first-half profits and restored its dividend as a turnaround drive progressed.

“‘There is definitely scope for a similar-size deal or even larger in Europe, ” said Sam Evans, global insurance deal advisory lead at KPMG in London, whose clients include both Zurich and RSA.

“In terms of the complementary fit of RSA’s business with our own operations, and in terms of financial benefits from, for example, expense and other synergies”, he said.

He said: “We are encouraged by the increasing momentum at this stage of our planned improvements”.

Half-year profits from suitor Zurich showed second quarter net profit falling 1% to 840m US dollars (£538mn), impacted by losses within its general insurance division.

Hester said RSA would be talking to its shareholders, of which activist investor Cevian Capital is the biggest with 13 percent.