Market expects to see a new bid tabled for the insurer from another suitor

Stock market figures

Brokers have been left stunned by news that Zurich has scrapped its planned takeover of rival insurer RSA.

Senior figures in the broking sector said the acquisition had looked like it was “a done deal”.

And now that Zurich has withdrawn its proposed bid, they believe that another insurer could still swoop in for RSA.

Zurich announced this morning that it was terminating its talks with RSA because it needed to focus on fixing its own general insurance problems, following large losses and difficulties with its US motor book.

Following the announcement RSAs shares fell by 20% to 403p in morning trading.

“It may not be next week, but once a company is looking to sell then they will ultimately sell. I wouldn’t be surprised to see Zurich come back in, but everything can change,” TEn Insurance director James Sharp said. 

“I am terribly surprised though, if you can’t sell your company then it’s certainly bad news.”

Aston Scott executive chairman Peter Blanc agreed.

“It’s a surprise because Zurich would have spent a lot of money trying to make it happen, but I suspect it will mean another suitor will step forward,” he said.

“RSA is one of the largest and most respected commercial insurers in the UK. For lots of other insurers it would be a feather in their cap.”

Be Wiser chairman and chief executive Mark Bower-Dyke said that RSA’s decision to pull out of brokered private motor market business could make it a harder sell for another potential suitor.

“It’s a total shock, I think RSA thought it was a done deal. With RSA pulling out of [brokered] private lines motor, they have become a less attractive proposition,” Bower-Dyke said. 

“I am flabbergasted by it, I think it’s worth more than its share price.”

Markerstudy commercial director Martyn Holman focused on prospects for an independent RSA.

“It is interesting because of where it now leaves RSA. They will now need to focus on what they will be doing,” he said.

“Looking at things from the outside it is difficult to see where they move forward, with little organic growth, but they are not alone in that.”

However, Brokerbility chairman Ashwin Mistry believes that RSA can take positives from the breakdown in negotiations.

“This looks positive. Zurich weren’t convinced in the first place and were nervous, so this could be best for RSA,” he said. “They now have their own story to develop and their own proposition to enhance.”

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