* Seeking bolt-on acquisitions, growth outside UK
* Sees emerging market premium growth above 15 pct
* Expects overall premium growth 5-9 pct in 2012
By Cameron French
TORONTO, April 17 (Reuters) – RSA Insurance Group is
seeking smallish acquisitions to drive growth outside its home
market in Britain, but will not make a big, multibillion-dollar
splash, the company’s chief executive told Reuters on Tuesday.
“You never say never, but my focus is firmly on bolt-on
acquisitions,” Simon Lee, who took over as CEO of Britain’s
biggest commercial insurer in November, told Reuters in Toronto.
He defined “bolt-on” as topping out around the C$420 million
($425.29 million) price tag that RSA — formerly known as Royal
& Sun Alliance — paid for Canada’s GCAN insurance in 2010.
“I feel it’s incumbent on me to fund our growth from our own
resources, and that means not going to the equity markets,” he
said. “That creates effectively a cap on the size of the
acquisition that we would undertake.”
NO. 1 IN UK, NO. 3 IN CANADA
Lee was in Toronto to open the company’s new Canadian
offices and pump the country as a growth market for RSA.
RSA is currently the third-largest player in Canada’s
property and casualty insurance market, following top player
Intact Financial and the Canadian operations of
Britain’s Aviva PLC.
While Lee said he does not measure the company’s success by
market ranking, he said he expects to keep growing in the
country as he continues to increase the company’s proportion of
profit from outside the slower-growing U.K. market.
Canada’s fragmented P&C; market provides plenty of smaller
takeover targets, many of which are struggling with inefficient
operations that Lee would hope to turn around with RSA’s scale.
The focus on smaller players means RSA will not revisit its
failed attempt to buy rival Aviva’s insurance assets. RSA was
rebuffed in such an attempt in 2010.
“We closed our books on it, and I see nothing that makes me
think they changed their mind,” Lee said.
The insurer is also expanding in continental Europe, and has
a small but rapidly growing presence in Latin America, Asia and
the Middle East.
“(Emerging markets premiums) grew 15 pct last year, and we
would expect at least that level of growth in 2012,” said Lee.
Premium growth for the company as a whole should be in a
range of 5-9 percent this year, he said, likely falling short of
last year’s 9 percent rate which was partially fueled by
acquisitions.
DISAPPOINTING DIVIDEND
Lee has endured a somewhat rocky ride since taking over from
Andy Haste, who unexpectedly stepped down last year after an
eight-year tenure and is credited with rebuilding the company’s
market value.
RSA’s shares fell in late February when the insurer unveiled
a smaller-than-expected dividend hike versus larger payouts at
rivals such as Alliance and Swiss Re.
But Lee — who says the dividend hike reflected a cautious
approach amid weak bond market returns — said investors have
largely been supportive of the move.
“I got a little bit of grief from one or two analysts, but I
think most people thought it was the sensible thing to do,” he
said.
The company raised its dividend by 4 percent, falling short
of the 5.2 percent expected by analysts.
“We will look to increase the dividend year on year, but
we’re obviously mindful of what’s going on in the wider economic
picture,” Lee said.
(Reporting By Cameron French; editing by Jim Marshall)
