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Sell RSA as the spring cleaning continues: Stephen Hester’s spring clean at RSA is approaching its second spring, and the cobwebs are taking longer than expected to remove in many corners of the insurance business. The company formerly known as Royal & Sun Alliance returned to profit in 2014, after a loss and a whopping accounting hole in 2013, yet the value of new premiums written and investment returns were weak. RSA’s combined ratio came in at 98.8%, meaning the firm is only just squeezing out money from the insurance policies it writes, once claims have been paid and other expenses taken care of. While this is an improvement on 2013’s ratio of 99.4%, and suggests that the price war in U.K. insurance is becoming slightly less punishing on the companies involved, it means RSA is nevertheless a couple of good thunderstorms away from a loss in its core car and home insurance units. In forecasts published in December, analysts at Nomura said RSA was much more dependent on investment income than other general insurers, with 68% of its expected 2015 income coming from its portfolio rather than its premiums. Mr Hester is targeting returns on equity of between 12% and 15%, but for 2014 the reported figure was just 3.6%, and the target appears to have slipped into at least next year, along with meaningful dividend growth. However, there are signs of renewal within the business. RSA’s international businesses that remained after a slew of asset sales are performing well, with premiums in Scandinavia up 3% once currency movements are excluded. Last summer, Questor moved to a sell rating as Mr Hester’s balance sheet surgery delivered sluggish results. ‘s token dividend is not enough to tempt us back into the fray, not while the turnaround plan has so many hurdles still to clear. RSA at 429.1p. Questor says “Sell”.
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How very very nice to hear from my favourite Scottish wee prickly thing, long time no speak. Hope all is well and that you portfolio is positively blooming now that the FTSE has decided to reach record highs and test 7,000 after being in the doldrums for 15 years!!!!! ATB.
my 'waiting for a miracle' drawer has collapsed under the weight! lol.that many lost count, feels more like dead and buried The drop brought me here! But after reading your post not for me at this time. ATB
I feel your pain. This has been a poorly performing share over the years but as I own so few they have been consigned to my 'waiting for a miracle' drawer. Doubt they will ever return to their all-time of 628p in 03/99 - which with the 1 for 5 consolidation would now be £31.40!!!! But with a return to profit and the re-instatement of a 2p Final div you may be back in profit one day soon. ATB.
Return to profit, reinstatement of the dividend, and the share price drops near 5% Oh well, as I'm averaged at circa £5, won't be going anywhere for a while yet. As ever, GLA and DYOR
Feb 22 (Reuters) - RSA Insurance Group Chief Executive Stephen Hester is set to unveil a deeper cost-cutting plan at the London-based general insurance provider as it works to turn around its business, the Financial Times reported. RSA, which according to the report had earlier set a cost-saving target in excess of 180 million pounds ($277.09 million), will be updating the market on its progress on Thursday, RSA spokeswoman Louise Shield said in an emailed statement. Hester is likely to unveil a more explicit, increased expense reduction target when he presents RSA's full-year results this week, the Financial Times report said, citing people familiar with the matter. (http://on.ft.com/1B3bOoX) The company has hired consultants at McKinsey as its adviser for its cost-cutting initiatives, the report added. RSA, best known for its More Than home and motor insurance brand, has been undergoing a series of restructuring initiatives after the firm was hit weather-related claims and an accounting scandal at its Irish unit in 2013. Under the former Royal Bank of Scotland boss Hester, who was appointed in February 2014, the company has raised fresh capital and is selling non-core units and restructuring its business. The firm's sell-off has included businesses in Asia, central Europe and Italy, with future disposals focusing on emerging markets other than Latin America. Last week, the company said it had sold its 26 percent holding in Indian insurer Royal Sundaram Alliance Insurance Company for 46 million pounds in cash to its joint venture partner Sundaram Finance. ($1 = 0.6496 pounds) (Reporting by Zara Mascarenhas in Bengaluru; Editing by Tom Brown)
This will need to be a lot higher than £5 before I consider dancing in the Isles or Aisles. £5 barely gets us back to where we were before the 1:5 consolidation last May, and now there is no div. ATB.
Feel free to dance in the Isles. Personally, I shall be dancing in the aisles. Still, each to his own......
Our impression is that the investment community has been dissappointed by the lack of apparent progress with RSA Credit Suisse boosted shares in RSA Insurance by arguing investors had been wrong to expect a quick turnaround similar to that at Aviva.
attractive divi profilel!!!Should see the divi restored this year. If RSA can get back to £5 i will be dancing in the isles. Hester is turning it around.
news on capital requirements. More to invest in underwriting rather than keeping the stuff
RSA Insurance's shares were given a boost on Thursday by an upgrade by Credit Suisse from 'neutral' to 'outperform', as the bank delivered an upbeat outlook for the UK insurance sector. "The fundamental appeal of the UK life and savings companies is underpinned by low interest rate risk, solid growth dynamics and attractive dividend profiles," Credit Suisse said.
Reason is a Credit Suisse upgrade to 'outperform' with a SP target of £5.25. Perhaps Mr Hester is starting to be believed.
big move up ?? cannot see why
Looks like its on an upward trajectory and with the divi being restored this year and a stronger more focussed business model and management team then future looks bright IMO.
chart £4 looks too dear
before I get remotely interested in this again
Over reaction as results not that bad and much of the new business decline is because they have sold businesses and so it is to be expected. Full year results and the return of the divi will set this heading up.
against the market trend today which was well up??? anyone know whey
Millions ‘wasted’ on car insurance inquiry: Britain’s competition watchdog has been accused of wasting “millions of pounds” of taxpayers’ money as it unveiled the results of a lengthy inquiry into the £11 billion motor insurance market.
I recall questor advising not to touch Merlin IPO last October but i am now sitting on a healthy profit. these analysts are really a jobs worth . Look at Finn Cap & Singer as well, useless. They keep dissing BTG and yet it keeps going up because fundamentally its a soild business with great growth prospects. Sorry for rant but some of these analysts really p..s me off. Cannot undersatnd how they have any clients given theri lack of credibility. RSA going in right direction and divi will be restored next year . all good. Hang in there
Shows what little he knows !!
“The stock is trading at a small discount to the sector, which we view as harsh given its now strong balance sheet and in line debt leverage. We find ourselves above consensus and… expect the group to be at the upper end of its medium-term targets,” Bank of America Merrill Lynch analyst William Hardcastle hails Stephen Hester's turnaround at RSA.
There was little reason for optimism in RSA Insurance (LSE: RSA.L - news) 's first set of results following a major restructuring, says Questor RSA Insurance 430½p-13.4p Questor says SELL RSA Insurance’s [LON:RSA] first set of results, following some major balance sheet surgery under Stephen Hester, was an opportunity to show shareholders the promise of a brighter future. However, the insurer fluffed its lines and Questor is now bailing out.