Shares fell 12.7% yesterday as market responds to profit warning

RSA’s share price fell 12.7% yesterday to 108.1p from a closing price of 120.8p on Friday after the insurer cut its operating profit forecast by £70m.

This means RSA’s share price is now trading at 2.12 times its net tangible asset value per share of 51p. This is down from 2.37 when the markets closed on Friday.

In a research note, Shore Capital analyst Eamonn Flanagan said the recent announcements from the group had damaged its image in the eyes of investors.

“In the space of a week, RSA has had to come to the market three times to explain trading conditions in its Irish operation (the first being part of a disappointing Q3 IMS). Unfortunately, the announcements made reference to ‘reserving issues’ and ‘claims issues’, words that strike fear into the hearts of management, investors and regulators … and not without reason,” Flanagan wrote.

Flanagan added that the issues hanging over the group would continue to have negative impacts on the insurer’s share price.

“There remain considerable uncertainties surrounding the issues in Ireland and we expect these, together with the disappointing Q3 2013 IMS, to overhang the stock in the coming months,” he wrote.