London - The RSA Insurance chief executive Stephen Hester on Thursday challenged its Swiss suitor Zurich to make a bid for the troubled FTSE 100 giant.
Zurich has admitted it is interested in buying RSA, but so far there have been no formal talks ahead of a possible £5.5bn deal. Under UK takeover rules, Zurich has until 25 August to make an offer and Hester said: “They have put themselves in a 'put up or shut up' situation ... the ball is now in their court.”
Once a stock market darling, RSA's reputation was hit by the discovery of a £200m accounting black hole in its Irish business in late 2013.
Hester joined the company last year following a five-year stint as chief executive of the state-owned Royal Bank of Scotland. He said the value of RSA as a standalone business remained “strong” as its pre-tax profits recovered from £69m last year to £288m in the six months to 30 June.
“From being the poor performer in the class, we're now sitting somewhere in the middle,” Hester added. “Our challenge is to get to the top of the class. We're no longer wearing the dunce's hat.”
In Switzerland, Zurich's chief executive, Martin Senn, said a tie-up with RSA could bring “significant benefits” to its own investors. But he warned the company would not overpay as its half-year operating profits dropped by 15 percent to $2.2bn (£1.4bn).
Zurich's advisers, including Morgan Stanley, are believed to be weighing a 525p-a-share cash offer - lower than the 600p mooted by some analysts but above RSA's current share price, which fell 14p to close at 510p yesterday.
RSA's banking advisory team includes Goldman Sachs and Robey Warshaw.
“Our shareholders have had a tough time and we're determined to make that happier,” said Mr Hester, who declined to comment on separate reports that the insurer is planning to offload its £500m Latin American business.
One company which will not be joining any bidding war is Aviva, which yesterday impressed the City with a 9 percent rise in operating profits to £1.1bn, following its £5.6bn tie-up with Friends Life in April.
“We have a very full agenda and a lot to do with the integration of Friends Life,” said the Aviva chief executive Mark Wilson. “Our focus is on that full agenda.”
THE INDEPENDENT