What Should RSA Insurance Group plc Shareholders Look For On Thursday?

RSA Insurance Group plc (LON:RSA) shareholders should learn more about the firm’s Irish fiasco on Thursday, when the results of an independent inquiry are announced.

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

RSA Insurance Group (LSE: RSA) (NASDAQOTH: RSANY.US) shareholders have seen the value of their shares fall by 20% over the last six months, but the firm’s current crisis may reach a conclusion on Thursday this week, when RSA will release the findings of a review by accountants PwC into RSA’s Irish business.

Markets are expecting PwC to conclude that the Irish problem was an isolated incident, and RSA’s share price has already bounced up by 7.5% to 98p this week, so what should shareholders be looking for on Thursday?

Ireland — more problems?

Although RSA’s recent profit warnings have mostly been due to adverse weather losses and are excusable, its Irish accounting fiasco is unacceptable.

Passive income stocks: our picks

Do you like the idea of dividend income?

The prospect of investing in a company just once, then sitting back and watching as it potentially pays a dividend out over and over?

If you’re excited by the thought of regular passive income payments, as well as the potential for significant growth on your initial investment…

Then we think you’ll want to see this report inside Motley Fool Share Advisor — ‘5 Essential Stocks For Passive Income Seekers’.

What’s more, today we’re giving away one of these stock picks, absolutely free!

Get your free passive income stock pick

Shareholders will need to pay close attention to PwC’s findings regarding RSA Ireland; were appropriate processes and controls in place, and if so, how were they breached?

RSA has already injected £200m of emergency capital into its Irish business, and if PwC uncovers any issues that could require asset write-downs or further injections of cash, the cost could become a serious problem.

Fundraising?

Martin Scicluna, RSA’s chairman, has already admitted that the events in Ireland have placed “additional strain on the capital metrics of the group”. The firm’s credit rating was cut to A- by Standard & Poor in December, and placed on a 90-day watch.

Translated, this means that RSA probably needs to raise some cash, as a further cut to its credit rating would mean that some of the brokers who sell its products could no longer recommend them.

Unless shareholders are willing to support a rights issue, the only way for RSA to raise money would be by selling or reinsuring some of its overseas assets, even though these represent the firm’s main source of growth.

Dividend prospects

RSA cut its dividend last year, and it now looks likely to do so again this year.

Mr Scicluna has said that the cost of the Irish fiasco “will be taken into consideration in the Board’s dividend decision in February”, and analysts have already cut the consensus estimate for this year’s payout to 4p, down from the previously expected payout of around 6.3p.

Is RSA a buy?

I recently recommended RSA as a buy at 92p, but this week’s 7.5% rise to 98p has made me cautious, as it could be violently reversed if the markets aren’t impressed by Thursday’s news. I’d hold for now.

This AI stock is attracting investors like Michael Bloomberg and Peter Thiel…

Why are these legendary investors, already wealthy beyond imagination, drawn to this opportunity? The allure lies in more than just potential returns; it's a vote of confidence in a company poised for long-term success.

Imagine a revolutionary AI company that's not just participating in the digital media landscape but reshaping it entirely.

Trusted by giants like Amazon, Disney, and Netflix, the company reported nearly £637 million in revenue last year, marking a robust 7.8% growth over three years. Its impressive market reach and spirit of innovation are just the beginning of its story.

Best of all, we’re thrilled to offer you an exclusive glimpse into this game-changing AI investment, absolutely free.

Get your free AI stock pick

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

> Roland does not own shares in RSA Insurance Group.

More on Investing Articles

Investing Articles

Prediction: 12 months from now, £5,000 invested in Tesla stock could be worth…

Tesla stock has endured a miserable year so far, falling by 29%. Muhammad Cheema takes a look at how it…

Read more »

Investing Articles

See what £10,000 invested in Tesla shares at their mid-December peak is worth today 

As the world absorbs the full scale of Donald Trump's tariffs, Tesla shares are reeling. Investors who bought the stock…

Read more »

Hand flipping wooden cubes for change wording" Panic " to " Calm".
Dividend Shares

2 ‘safe’ LSE dividend stocks to consider as global markets sell off

As global markets experience high levels of volatility due to economic uncertainty, investors are piling into these ‘safe-haven’ dividend stocks.

Read more »

Investing Articles

US stock market rout: an unmissable opportunity for investors?

His tech-heavy portfolio has been smashed by Trump’s tariffs. However, Dr James Fox believes there could be some opportunities in…

Read more »

Investing Articles

After a 13% ‘Trump tariff’ fall, is the Barclays share price too cheap to miss?

Does the Barclays share price fall mean we should all panic and run screaming from the stock market? Nah, of…

Read more »

Mature Caucasian woman sat at a table with coffee and laptop while making notes on paper
Investing Articles

2 investment trusts to consider for a Stocks and Shares ISA

These two investment trusts have a different focus -- but our writer sees both as worth considering, one more for…

Read more »

Investing Articles

Deutsche Bank reiterates Buy rating on 9.6% yielding FTSE 250 stock that was “most shorted in UK”

Our writer investigates why a major broker remains optimistic about a FTSE 250 stock that was once the most shorted…

Read more »

Investing Articles

2 things to remember when stock markets are turbulent

US trade policy has rattled the stock markets in New York, London and elsewhere. Our writer outlines a couple of…

Read more »