Questor share tip: Hold RSA being simple can yield dividends

By Questor Published: 7:00AM GMT twenty-six February 2010

RSA Insurance Group

RSA Insurance

129.7p -2.1p

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Questor says Hold

The ubiquitous word organisation has been solid but ever wanting to be fantastic during a duration when most of the neighbours opposite the block mile have faced critical questions about the health of their shift sheets.

Last year, headlines that the association was exploring a �600m rights issue - in sequence to have a transformational merger - was greeted with mystification via the word market. This was in the future scrapped and yesterday"s full-year formula indicate that the old proverb - "if it aint broke, don"t repair it" - is behind in practice at the association before well known as Royal & Sun Alliance.

While the insurer saw full-year pre-tax increase decrease �205m to �554m it met marketplace expectations. Some �75m of the tumble reflected revolution costs from last year"s cost slicing programme, whilst the residue was mostly a tumble in investment income.

Elsewhere, income from word premiums was up 4pc to �6.7bn, assisting the total comparative measure solve at important 94.6pc (this reflects underwriting profitability with total subsequent 100 display a profit). The headlines authorised the association to lift the last division to 5.33p per share, on credit on Jun 4.

Last year, Questor placed a hold on RSA in the idea that shares in the association would produce a solid source of income for investors. Twelve months after and there seems really small need to shift this stance.

The shares now produce 6.1, a figure that is approaching to urge over the entrance years. The cost to gain comparative measure is likewise positive, station at 10.4, but expected to tumble to 8.8 over the subsequent 4 years.

RSA"s share cost has valid walking over the period, rising from 126p to 129.7p at yesterday"s close.

But investors will have been gratified by a little of the brazen seeking statements done by Andy Haste, RSA"s arch executive. He was bullish about the company"s general and rising markets businesses, that are expected to be bolstered by bolt-on acquisitions.

The Solvency II regulatory system, that has sent shivers between a little hold up insurers, is additionally doubtful to poise threats to the company"s collateral levels, that stays strong.

Sometimes being elementary is the right thing to do. In RSA"s box this seems to literally compensate dividends. Hold.