Takeover target RSA Insurance has trebled its half year profits as chief executive Stephen Hester’s “action plan” for the British insurer shows signs it is coming to fruition.
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Swiss group ACE for instance bought upmarket U.S. property insurer Chubb Corp last month in a $28 billion deal to get access to wealthy clients.
The company recorded net gains of 169 million pounds, including 140 million pounds from disposals completed in the first half.
The blue-chip insurer’s suitor also updated markets on its performance today, saying that a tie-up with RSA could bring “significant benefits”.
Once a stock-market darling, RSA’s reputation has been hit since the discovery of a £200 million black hole in its Irish business in late 2013.
RSA shares fell in early trading despite posting interim results showing that group operating profits rose 84% compared with last year’s first half to a better-than-expected £259million, driven by higher underwriting profits, fewer weather-related claims and stable investment income.
RSA surged by the most in nearly two decades last week after Zurich said it was considering a bid, stirring speculation it may attract other offers.
Reports suggest an offer could be worth up to £5.4bn, but Zurich has until August 25 to make a firm bid or announce it does not intend to make an offer. “The interim dividend is restored and progress continues on strategic reshaping and capital strength”.
He said: “We are encouraged by the increasing momentum at this stage of our planned improvements”.
“The profitability of our general insurance business was adversely affected by large losses, particularly within global corporate and the UK, and a higher expense ratio”, chief executive officer Martin Senn said in the statement.
Hester said RSA would be talking to its shareholders, of which activist investor Cevian Capital is the biggest with 13 percent.
Zurich has admitted it is interested in buying RSA but there have been no formal talks between the two parties ahead of a possible £5.5 billion deal.
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Zurich reported a second-quarter business operating profit of $943m (£604m), which analysts at Citi said was 18% lower than estimated.
