UPDATE 2-British insurer RSA’s profit rises, takeover on track

UPDATE 2-British insurer RSA’s profit rises, takeover on track

* Takeover of RSA seen completing in May

* 2020 operating profit up 15%

* Departing CEO Hester not planning on a SPAC (Adds CEO comment, detail, shares, analyst)

LONDON, Feb 26 (Reuters) – The purchase of RSA by Denmark’s Tryg and Canada’s Intact Financial is likely to complete in May, the British insurer’s chief executive said on Friday, as the firm reported a 15% rise in 2020 operating profit.

The 7.2 billion pound ($10 billion) takeover was agreed last year.

Under the terms of the deal, which is still awaiting some regulatory approvals, Intact will gain the motor, home and commercial insurer’s Canada, UK and international operations while Tryg will take the Sweden and Norway businesses. The pair will co-own RSA’s Danish unit.

RSA, which started in 1706, said strong underwriting discipline had helped its performance.

“The bidders bought something that is in great shape,” CEO Stephen Hester told Reuters by phone.

RSA said there was a net COVID-19 impact of 42 million pounds on operating profit from premiums, claims and investment income.

Lower levels of claims for motor and home insurance as people stay at home due to lockdowns have, however, shielded insurers from some of the impact of the virus.

RSA’s shares edged down 0.12% at 0902 GMT, with Jefferies analysts saying the firm had “weathered the pandemic well”.

RSA has started paying out on business interruption claims, Hester said, after a recent test case brought by Britain’s markets watchdog found mainly in favour of policyholders.

Hester, who joined RSA as CEO in 2014, is due to step down after the takeover. He said he would be looking at future board roles, rather than another chief executive position.

Several former CEOs such as Credit Suisse’s Tidjane Thiam and Unicredit’s Jean-Pierre Mustier have launched deal-hunting special purpose acquisition companies (SPACs).

“All sorts of bankers have been calling me up saying why don’t I do that – that’s not my plan,” Hester said.

$1 = 0.7179 pounds Reporting by Carolyn Cohn. Editing by Rachel Armstrong and Mark Potter

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