My big concern with Hester is what he intends to sell off next. Everyone knows that the UK business needs to be overhauls, however the profitable arms are overseas. Its a case that you can only sell the family jewels once.
Hester pay revolt: Stephen Hester suffered a setback when 16 % of RSA’s shareholders voted against the Chief Executive’s pay at the company’s annual meeting in central London (writes Kathryn Hopkins). The package could be worth as much as £5.7 million, as long as Mr Hester meets all his targets.
RSA: clouding over: When Stephen Hester was appointed Chief Executive of insurer RSA in February last year the shares rose 8% in a week. But since then the clouds of low interest rates have obscured the sunny start and more than reversed that gain. Mr Hester has made the right moves to improve what was a troubled business. A £775 million rights issue last year fixed the balance sheet. The capital position is comfortable (but not excessively so). But the wind is not following. Low interest rates hurt in many ways. First they cut the income that RSA generates from its investment book. It expects £380 million of such income this year, against £439 million last year. Low rates also push yield-hungry investors to seek new homes for their capital, and insurance is one such home. The resulting capital influx pushes down premiums. So RSA did well to increase premiums slightly in the first quarter, reported on Thursday (although exchange rates pushed reported premiums down 6%). But add all the pressure together, and analysts expect RSA to report EPS of 32p for 2016. When Mr Hester was appointed, the estimate for 2016 was 56p. Thursday was a decent day for RSA. The shares edged ahead on the back of the first quarter numbers, while the jump in European government bond yields could also be helpful. But these are gaps in the clouds, rather than signs that the sun is returning.
about the pension scheme deficit? One thing's certain and that's Hestor is not a beneficiary so it's in his interest to sort out the deficit according to the needs of the company. Also people are forgetting that a deficit is at a fixed point in time and can completely change (for worse or better) almost overnight. It's the discount rate on long term bonds that are the issue, not the RSA PS. GI is an easy game as long as the risk management is sorted, that's what investors need to check. Oh, and yes, I am invested here (average at 440 ish)
I take on board everything you have responded with and agree to a point.
However I am almost certain that a large number of employees that have been paying into a final salary scheme for more than 20 years, have now been switched over into defined benefits/pension pot schemes on an accrual basis.
They used to quote their fantastic final salary pension scheme in almost every recruitment advert they put out.
It should be treated the same as other pension changes as you have indicated. They should agree to split the pension payment, on retirement according to how many years you paid in under final salary and how many under newer scheme. E.G. worked 44 years and for first 33 years paid into final salary scheme, then 3 quarters of pension should be based on your actual final salary and the rest according to the new sheme arrangements. Seems Dick Turpin rides again!
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