RSA has been told only a full sale will get best value for shareholders and selling bits of the business is not now beneficial.
Berenberg said today: ”The pension liability and loss of diversification benefits in its capital model mean disposing of any remaining operations is unlikely to be beneficial for RSA shareholders.”
Berenberg said in its note that chief executive Stephen Hester (pictured below) had hinted RSA’s different parts of the business together, when compared to peers, meant a valuation of £8.50 on share price.
That means a value of £8.7bn, according to Insurance Times calculations.
The firm is currently trading at £6.34, with a market capitalisation of £6.51bn.
But Berenberg said Hester way of valuing the business - called sum-of-the-parts (STOP) - was ‘likely unattainable without a bid forthcoming’.
Elsewhere, Berenberg praised Hester’s transformation of the business and said it can double 2017 earnings to £540m by 2019, hitting an impressive combined ratio in the low 90s.
The bank analysts at Berenberg said RSA can now concentrate on operational improvement.
“All the boxes have been ticked; the balance sheet is in good order, leverage is at a suitable level; the company has a clear and rational footprint; and its operations are underwriting profitability,” Berenberg said.