‘We will look at the right deal at the right time,’ says insurer, refusing to comment on rights issue

RSA has opened a door to an acquisition, and says it could be of any size.

“We will look at the right deal at the right time,” said a spokesman. “Given what is happening in the global financial economy, we are seeing opportunities now that we weren’t seeing 18 months ago. And while they are all over the place, they tend to be biased to outside the UK across our international and emerging market businesses.”

The comment comes after a presentation to analysts by chief financial officer George Culmer. KBW then raised speculation that RSA would consider a larger deal than the usual bolt-on acquisitions.

However, the spokesman played down Culmer’s comparisons, made during his presentation, with the recent £600m Codan minority buy-out, partly financed by a rights issue. “The rating agency capital was a constraint, which is why we’d raised the £300m of equity for the Codan deal,” he said.

Reports have so far suggested that RSA wants to raise £600m to finance a deal outside the UK. Chartis’s Latin American business has been singled out by analysts, as have some insurance operations of Fortis, the Belgo-Dutch financial services group.

European insurance analyst for Standard & Poor’s Equity Research Martin Nicolson said there was rationale behind such a move. “If they were to go into an emerging market area, it would help grow their business rapidly and revive their sluggish share performance.”

RSA has completed six acquistions this year, but news of a possible large acquisition has not been favoured by the market.

The group’s share price dipped 1.67% to 123.90p per share early this week.

RSA denied it was planning to conduct a rights issue. “We are not commenting on rights issues speculation.” But the spokesman added that the insurer would not rule it out.

“Acquisitions will continue to be part of the strategy and if there were opportunities greater than a certain size, then you would need equity to protect the A rating,” he said.