RSA says receives 550 pence cash offer from Zurich

RSA Insurance announced this morning that rival insurer Zurich has tabled a £5.5 billion ($US8.6 billion) offer for the company, following takeover talks first announced last month.

RSA say that there can be no certainty that any firm offer will be made.

The UK insurer told Zurich it would be prepared to recommend the potential bid to RSA shareholders subject to meeting the other terms of the offer.

Zurich shares were indicated up 0.9 percent.

Shares in RSA Insurance Group (LON:RSA) have soared near the top of the FTSE 100 leaderboard after the company disclosed that Zurich Insurance had hiked its offer for the company to 550p per share.

The Financial Times, citing people familiar with the matter, reported that RSA would agree the plan and most likely ask the UK’s takeover watchdog to extend the deadline for Zurich.

Zurich, which has said it would not overpay and is seeking a return on any investment in RSA of at least 10 percent, said it had reached a “common understanding” with RSA on how the British general and commercial insurer values itself.

“The deal hasn’t been done yet”, said Stefan Schuermann, an analyst at Vontobel AG in Zurich.

Half-year results from RSA earlier this month showed group operating profits rose 84% to a better-than-expected £259 million compared to a year ago, driven by higher underwriting profits, fewer weather-related claims and stable investment income.