INSURANCE GROUP RSA has confirmed it is considering a rights issue to raise hundreds of millions of pounds to strengthen its balance sheet following the discovery of accounting irregularities in its Irish division and losses from recent floods in the UK.
A rights issue is one of a number of measures being considered by the insurer, although “no final decision” has been made, the insurer said in a statement to the stock exchange. The fundraising could amount to £800m, the Sunday Times reported.
The capital raising is part of a rescue strategy being devised by CEO Stephen Hester, the former boss of RBS, who was hired to run RSA earlier this month.
Hester succeeds Simon Less, who left RSA last year following a series of profit warnings and the discovery of more than £70m in claims and accounting irregularities in its Ireland division.
PwC was called to review the insurer’s financial controls and processes, while additional assurance testing by new auditors KPMG, and its internal audit division, found the irregularities to be “isolated” to Ireland.