Zurich Insurance leaves RSA hanging high and dry

In what has turned out as a double-loss for RSA shareholders, pursuer Zurich declined to make an authoritative offer for the British insurer. This came at the back of the explosions at Tianjin, China, of which RSA is the insurer. The deal to be valued at £5.6 million was scuppered as RSA announced they were to suffer losses of £175m to cover the cost of the deal. The withdrawal news caused RSA’s share price to plunge 21%. The deal would’ve been a much needed reprieve for CEO Stephen Hester, who had previously been CEO of RBS until June 2013. If successful, Hester would’ve received a bonus of £8.5m from the deal. Zurich cited the general insurance arm of the company a major cause for concern, given the loss over the Tianjin blast and the $300m loss the company would take for its US car insurance arm. Zurich is still on the lookout for other potential acquisitions. RSA is also expectant that other pursuers would come. This might take some time however, as the company is making an investigation into its general insurance arm, which appears to be the only problem with the company.