Date: Thursday 26 Feb 2015
LONDON (ShareCast) - Underwhelming results from RSA were weighing down on the non-life insurance sector on Thursday despite the FTSE 100 company swinging to a profit and recommencing its dividend payment.
RSA, the third-largest insurer in the UK, reported a pre-tax profit of £275m for 2014, compared with a £244m loss the year before, as it restarted dividend payments with a final dividend of 2p per share.
Chief executive and former RBS boss Stephen Hester, who was brought in to turn RSA around last February, said the company had "made good progress in the face of some tough realities".
However, profits were not enough to meet City forecasts of £299m, pushing the shares down 4.8% to 428.6p by the close.
The departure of RSA chief financial officer Richard Houghton may have also disappointed some investors.
"There remains much going on at RSA and the business remains a 'work in progress' and as such we believe that there are better investment opportunities elsewhere in the short to medium term, particularly within the life sector," said Barrier Cornes from Panmure Gordon.
The analyst, who kept a 'sell' rating on the stock, said that the trading environment is still very competitive "driven by excess capital in the non-life industry putting downward pressure on rates, margins and profitability".
Takeover target Brit also edged lower after a strong performance over recent months following a recommended £1.2bn cash offer from Fairfax Financial. The insurer on Wednesday reported a pre-tax profit up £139m for 2014, up nearly 40% on the previous year.
Meanwhile Beazley, which broker Westhouse highlighted was the "best performer" in the non-life sector last week, dropped over 8% after going ex-dividend. Westhouse maintained its 'sell' stance on the shares.
Elsewhere in the sector, Direct Line, Helios Underwriting, Amlin, Hiscox and Novae were also trading in the red.
Top performing sectors so far today
Household Goods & Home Construction 14,084.73 +1.76%
Industrial Metals & Mining 1,899.82 +1.53%
Food & Drug Retailers 3,360.77 +1.49%
Fixed Line Telecommunications 5,101.05 +1.25%
Industrial Engineering 9,510.45 +1.22%
Bottom performing sectors so far today
Insurance (non-life) 2,079.05 -1.94%
Gas, Water & Multiutilities 5,881.32 -1.32%
Electricity 9,373.54 -1.20%
Oil & Gas Producers 7,313.31 -1.06%
Media 7,224.72 -0.97%
Email this article to a friend
or share it with one of these popular networks:
