Zurich considering rsa takeover Insurance Age

RSA surged 11 percent after Zurich Insurance said it was weighing up a bid for the British group with a market capitalisation of 4.4 billion pounds ($6.85 billion).

New European rules that dictate how much cash insurers should keep in reserve to protect themselves from future market shocks have also led to speculation that companies will look to diversify.

Zurich, one of the world’s biggest insurers, said in a brief statement that it was “evaluating a potential offer” for RSA but cautioned that it may not make a bid.

RSA, which operates as a general insurer, had already seen its shares rise by nearly a tenth in the past month as traders bought into the prospect of a takeover bid emerging.

There is “no assurance that any offer will be made”, Zurich added.

Zurich was reportedly considering a bid valuing RSA at 5.5 billion pounds, or 550 pence a share, the Financial Times said.

Zurich is seeking to redeploy $3 billion of capital by the end of 2016, including on mergers and acquisitions, the Swiss insurer said in May. Zurich shares were down 2.4 percent.

“RSA has strong market positions in Scandinavia, in Canada, a large UK commercial franchise and operations in Latin America”, said RBC Capital Markets analyst Kamran Hossain.

Hester, the former CEO of Royal Bank of Scotland Group Plc, has sought to reverse a decade’s worth of acquisitions made by Lee and previous management.

“Of particular interest to bidders would be the Scandinavian business in our view”.