Rsa Float Kicks Off After Big Uk Loss
Sydney Morning Herald
Friday March 7, 2003
Retail investors will finally get a chance to support what might prove to be the biggest sharemarket float of 2003, with troubled British insurer Royal & SunAlliance saying last night it would begin marketing the estimated $2 billion float of its Australasian operations next week.
Releasing its 2002 results in London, Royal & Sun said a ``pre-registration program" for a retail offer of shares in Promina (the new name for the floated operations) will begin in Australia and New Zealand this Sunday.
It is expected that a television and newspaper advertising campaign will offer a hotline for investors to reserve a prospectus, but the document is unlikely to be in the hands of investors for several weeks.
The float has been buoyed by several good financial reports by peer companies including last week's bumper result by Insurance Australia Group a direct competitor to Promina's motor and home and contents insurance arm, AAMI and yesterday's full-year $279 million profit by QBE Insurance.
But times aren't so good for Royal & Sun, which last night cut its annual dividend from 16c to 6c and reported an expanded annual loss of #940 million ($2.44 billion).
Acting chief executive Bob Gunn is seeking to strengthen its tenuous capital position by selling assets, chief among these being the Australasian operations it hopes to sell by the end of the first half.
Promina would be listed on both the Australian and New Zealand stock exchanges, and customers and employees would be offered an opportunity to buy shares. RSA shareholders will have to approve the deal just one of the hurdles to the float proceeding, along with generally difficult market conditions.
Goldman Sachs and Macquarie Bank are joint global co-ordinators while Merrill Lynch, ABN Amro Rothschild, JB Were and JP Morgan are co-lead managers. While the pricing of the float is still to be determined (Merrill Lynch has roughly estimated Promina to be worth around $2 billion), RSA's results last night provided some insight into the financial position of the local arm.
While not strictly comparable because an assortment of Asian operations will not be part of the float, RSA's Asia-Pacific arm was one of the few divisions in the group that apparently is profitable at an underwriting level.
Asia-Pacific reported a combined operating ratio of less than 100 per cent. The ratio measures claims and expenses as a proportion of premium income, and a sum of less than 100 per cent suggests an underwriting profit.
The ratio for the Asia-Pacific operations fell from 99.6 per cent to 98.2 per cent, while RSA noted AAMI and AAI produced strong results, as did the mortgage indemnity operations.
© 2003 Sydney Morning Herald