News Column

Hester sets up pound(s)238m deal to sell Canadian brokerage firm

May 21, 2014

STEPHEN Hester's turnaround plan at insurer RSA has taken another step forward with a deal to dispose of its Canadian brokerage business for around pound(s)238 million.

The former Royal Bank of Scotland chief executive has already performed a pound(s)775 million fundraising to repair the balance sheet and sold operations in the Baltics and Poland for around pound(s)300 million as RSA bids to focus on core assets.Yesterday RSA confirmed it is selling its majority stake in Noraxis Capital Corp to US insurance firm Arthur J. Gallagher & Co.

The transaction is subject to regulatory approval but is expected to close within the next two months. Upon completion Gallagher, which has operations in 25 countries around the world, will hold approximately 87% of the equity interests in Noraxis, while 13% will continue to be owned by various management employees of Noraxis.

J. Patrick Gallagher, chief executive of New York-listed Gallagher, said: "By adding Canada to our recent expansion in Australia, New Zealand and the UK, we are now well positioned in those countries to replicate our successful acquisition strategy."

In RSA's 2013 financial statements Noraxis accounted for pound(s)184 million of total assets and for pound(s)85 million of shareholders' funds.

Mr Hester said: "This disposal represents further progress against our aim of tightening the strategic focus of the group, and brings to around pound(s)540 million the announced sales since our new strategy and action plan was unveiled in February. We will continue to evaluate further non-core disposals, some of which we expect to agree during 2014."

RSA also confirmed Mr Hester's conditional award of performance shares under its 2014 long term incentive plan will be 585,431. Those will not vest until May 2017 and are subject to certain performance conditions being met.

RSA shares closed up 0.4p, or 0.08%, at 490.2p.

The company has been seeking to boost its capital base by up to pound(s)1.6 billion after it was hit by a series of weather-related claims and an accounting scandal at its Irish unit.

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Source: Herald, The (Scotland)

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