RSA Insurance rose by its highest rate in almost five years in London trading after a report that the insurer’s Irish unit may require no further capital injections.
The stock jumped as much as 8.4 per cent, the biggest gain since February 2009, after the Sunday Telegraph reported the London-based insurer probably will not require further writedowns, according to an inquiry led by PricewaterhouseCoopers.
UBS also added RSA to its most preferred list.
"The issues faced by the company can be addressed without the need for a full rights issue or franchise damaging disposals," said James Shuck, an analyst at UBS in London, with a buy rating on RSA. "A takeover remains a possibility."
UBS argued that the group was a likely target for Sampo, the Finnish insurance group. Its break-up valuation was at least 129p a share.
Potential disposals
"Sampo could oversee a takeover with a view to disposing of the operations it doesn't want. These would most likely include everything except the Scandinavian operations and the Baltics," said Mr Shuck.
The shares closed at 98.40p, up 6.25 per cent. They sank 27 per cent last year after the insurer issued three profits warnings in the fourth quarter and injected £205 million into its Irish unit to help plug a shortfall.
RSA is due to release the PwC findings on Thursday.
RSA Ireland chief executive Philip Smith resigned in November amid an investigation into whether the Irish unit reported the amount of premiums paid to the company earlier than it should have and the timing of when it set aside funds to cover claims.
Chief financial officer Rory O'Connor and claims director Peter Burke remain suspended. – (Bloomberg/ Financial Times Limited 2014)
