RSA Rights issue

Thrugelmir

Glen_Clark wrote: »

So is selling a good investnent thats only going through a temporary setback

A few weeks back.

RSA's (RSA) nasty looking loss for 2013 reflects such issues as well-flagged under-reserving in Ireland and above-trend weather claims. Indeed, RSA suffered a £293m weather hit in 2013, most significantly from Canada; just £14m related to UK storms and flooding. But that’s all of secondary importance compared to new chief executive Stephen Hester’s plan to tackle the capital shortfall.

He announced a £775m rights issues, axed the full-year dividend, and will raise £300m in 2014 from selling non-core operations. RSA will focus on core regions (Canada, Scandinavia, Latin America and the UK & Ireland) with disposals initially coming from such regions as Asia and the Middle East. Some £550m has already been found through increased reinsurance cover (which cuts capital requirements), the sale and leaseback of its Swedish headquarters and the disposal of the equity book.

The combined ratio (of claims to premiums) did fall 4 percentage points but, at 99.6 per cent, the group just about remained profitable at the underwriting level. Premium rates are generally holding up, too, with single-digit price increases seen in most business classes. Some £45m-£60m of UK weather losses have been registered since the start of 2014, however.

Deutsche expects adjusted EPS of 4.4p this year (up from a 9.8p loss in 2013), and net tangible assets (NTA) of 62p.

RSA faces big challenges, so don't expect a meaningful dividend for some time. But Mr Hester’s plan looks sufficiently credible to limit further downside, while the shares, trading on 1.5 times forecast NTA, aren’t as demandingly rated as they were. We exit our sell tip - HOLD

That's the beauty of investing. Open to opinion.

Special_Saver2

jwhxch wrote: »

Ok, not sure if I've made a boob, but had 559 shares allocated, which I inadvertently sold ... does that mean I will be charge 56p for each one on the 1/4/2014 or by selling them I've decided not to take up the offer. If I've made a mistake ... can I purchase 559 again and then say don't want them. Was not stopped from selling them on selftrade and not clear how I indicated I was not going to through bad money after worse....

Don't panic. It means that you have sold your rights to participate to somebody else and received a cash sum in return (between 32.75p and 35.25p each) for selling your rights. The person or institution that bought your rights can now participate in the offer. You are not going to be charged anything, indeed you will receive today's cash sum for selling your rights minus your dealer's commission. There is no need for you to do anything else now. If you are wondering how I knew the price you received for selling your rights, your rights have the ticker code RSAN and can be bought and sold just like ordinary shares with prices quoted here.

If you did not want to participate in the offer then you may have received the value of the unused rights at the end of the offer period without any commission deducted. You would have to look at the covering letter from your broker for more details.

In any event, you have sold the rights now so unless you want to incur more dealing charges then just sit back and be happy with the money that you have received for selling the rights today. If the value of RSA shares goes down between now and the end of the offer then your accidental sale today may have got you more money than if you had held on to the rights.

SS2

jwhxch

Should have asked before I hit sell, but then I was not looking to buy more, so turned out ok in the end ... even if the price rises.. happy to take some cash.... to invest elsewhere.

LannieDuck

I have a further question about this, if anyone can shed some light for me? I'm a very novice investor. Keen to learn and have a small number of shares that I'm slowly building up. This is the first time I've come across a rights issue.

I have the option to buy approx 1000 RSAN at 56p. I've just gone into my Barclay's dashboard and it's showing the option to buy/sell the 1000 RSAN: sell at 33.75p (which I understand), but it looks as if I can also buy at 34p.

Would this be buying the shares on the open market at a cheaper price than buying them through the 'rights' process.... or would I just be buying the rights, and I would have to go further and then buy the shares as well, i.e. it would cost 34p + 56p?

(I also can't find any option on my dashboard for buying at 56p, but I'll probably do it over the phone instead to make sure I get it right.)

Linton

LannieDuck wrote: »

..........

I have the option to buy approx 1000 RSAN at 56p. I've just gone into my Barclay's dashboard and it's showing the option to buy/sell the 1000 RSAN: sell at 33.75p (which I understand), but it looks as if I can also buy at 34p.

Would this be buying the shares on the open market at a cheaper price than buying them through the 'rights' process.... or would I just be buying the rights, and I would have to go further and then buy the shares as well, i.e. it would cost 34p + 56p?

(I also can't find any option on my dashboard for buying at 56p, but I'll probably do it over the phone instead to make sure I get it right.)

The latter - current RSA share price = 90p = 34p + 56p

Buying the rights wont be worthwhile unless you know something no-one else does.

LannieDuck

Thank you, much appreciated