City analysts say Royal & Sun Alliance has a deficit in its staff pension fund of up to £750m which could derail plans for a £1bn rights issue.
According to The Times newspape ...
City analysts say Royal & Sun Alliance has a deficit in its staff pension fund of up to £750m which could derail plans for a £1bn rights issue.
According to The Times newspaper, the insurer, which recently ousted its chief executive, Bob Mendelsohn, is expected to unveil a rights issue next month in an attempt to shore up its battered capital base.
But analysts said yesterday that investors would need strong reassurance on the pension schemes' funding position before taking up a rights issue.
R&SA's pension schemes showed a net deficit of £195m at the end of last year. But the £4.2bn pension schemes across the group were about 70% invested in equities at the last disclosure.
The market has fallen 20% since then, and corporate bond yields, used to measure the scheme's liabilities, have also fallen, increasing the deficit.
UBS Warburg estimated that the scheme deficit stood at £637m, more than 35% of the company's value on the market.
One senior actuary said the deficit was likely to be in excess of £750m, according to the newspaper.
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