Zurich ends RSA bid after China blast claims

ZURICH Insurance abandoned its proposed £5.6bn bid for Britain’s RSA yesterday, after forecasting a $200m third-quarter loss largely due to the devastating explosions at the Chinese port of Tianjin.

A day before a bid deadline under British takeover rules, Zurich said it would conduct a review to improve the performance of its general insurance business, instead of taking over its London-listed rival, sending RSA down by as much 23%.

RSA — which is pursuing a turnaround strategy under former Royal Bank of Scotland boss Stephen Hester — said that Zurich had found nothing untoward in its “due diligence” checks on its books that would have thwarted a deal on the 550p per share terms proposed on August 25.

RSA said that its July and August trading had been positive, but its shares were trading at 404p yesterday morning, 8% below their closing price the day before Zurich said it was weighing a takeover bid.

Zurich, whose shares were down 1.6% yesterday, announced aggregate losses of around $275m from the explosions at a container storage station in Tianjin last month.

The company said the final cost was uncertain but it did not expect a significant increase in claims.

The Swiss insurer also said recently completed reserve reviews indicated a likely negative effect of about $300m in the third quarter for US automotive liability and other lines of business.

“Given the deterioration in profitability ... General Insurance CEO Kristof Terryn is conducting an in-depth review of the business,” Zurich said.