For a while now a number of commentators have suspected that something or other might be under consideration at RSA.

When, a couple of weeks back, a rumour went around that RSA might be considering a £350m rights issue, the firm responded cagily. “RSA is considering measures to strengthen its balance sheet, including raising capital by way of a rights issue, however no final decision has been made,” said an official statement at the time, adding redundantly: “by the company at this time.”

Last week Insurance Times managed to get RSA to confirm that a rights issue might indeed be one of the things recently installed CEO Stephen Hester was considering. But, some commentators wondered, might he also have been considering other things? Might he, perhaps, be considering his position, his sanity, his judgement in accepting the RSA job in the first place, the attractions of a short-break holiday, rearranging his office furniture, grabbing a sandwich for lunch, or just selling the blo*dy thing and being done with it.

But now we finally have some clarity on what Hester and his firm are considering. “We need to raise £775m from our shareholders”, he (or possibly his twin brother Simon) said bluntly on popular insurance video channel YouthTalkinsurance today (see below), noting that it would take until sometime in April to put the mechanical processes in place for this.

In the meantime, he said, the pre-process of explaining to shareholders why RSA needs all this money and why “we hope we will be good stewards of it” starts here. Accepting that there had been some disappointments and “some things that aren’t so great” about “The RSA” recently, he insisted that this “is not a broken company” and that he hoped things would get a bit better from now on.

Key to this, he explained, will be to get some more money in, get rid of all the bits of the business around the world that are, frankly, a bit pants, to get some more money in, to have a proper go at making some larger profits for shareholders (through initiatives such as cutting costs, being less inefficient, not making stupid underwriting decisions etc.) and to get some more money in.

It would be wrong to be overconfident, however, he cautioned. Things can go wrong. But the beauty of strengthening the company’s capital base through a rights issue would be that it wouldn’t then be such a disaster “if one or two things do go wrong.”

Sounds like a plan.




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