Former Royal Bank of Scotland boss Stephen Hester is set to launch a huge fundraising effort this week as part of his bid to revive RSA, the insurer he joined this month.
Hester, who is being paid a £950,000 salary with the potential for his total package to top £5.3 million, is also expected to confirm that the More Than parent is scrapping its final dividend. City analysts believe Thursday’s results will show pre-tax profits have slumped to about £130m, down from £479m in 2012, following a surge in flood claims and an accounting scandal at its Irish subsidiary, which led to the departure of previous chief executive Simon Lee.
RSA, which has been hit by a string of profit warnings, slashed a third off its interim dividend in August and analysts at Brewin Dolphin said: “We expect RSA to suspend its final dividend, cut 2014 dividend guidance and potentially also announce a placing or large rights issue of up to £500m.”
However, reports yesterday said the insurer could be seeking to raise as much as £800m.
A spokeswoman said: “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 by the company. Further details will be given when appropriate.”
RSA last month sought to draw a line under the problems at its Irish arm after a trio of reviews found irregularities at the business did not amount to a group-wide problem.
An independent inquiry alleged that “inappropriate collaboration” among a small number of the division’s managers was responsible for a £200m hit to its finances.