RSA Insurance Group plc Hints At Forthcoming Dividend Cut

The shares of RSA (LSE: RSA) (NASDAQOTH: RSANY.US) dropped 2p to 98p during early trade this morning after the insurer hinted it may announce a dividend cut within its February annual results.

The FTSE 100 member confirmed today that the irregularities discovered within the group’s Irish division would cost £200m and that an independent review had identified “no material issues…elsewhere in the group“.

However, RSA added that further extreme weather during the Christmas period would “impact the 2013 result” and would be “taken into consideration in the Board’s dividend decision in February“.

Today’s statement also confirmed that Martin Scicluna, the executive chairman of RSA, was continuing his review of the group that aims to improve capital ratios and “deliver a sustainable dividend“.

Mr Scicluna said:

The underlying business continues to perform in line with our expectations and I am making good progress on the review of the Group. The Board and I remain confident that RSA will re-emerge as a stronger group during 2014.

Earlier this year, RSA cut its payouts by 33%, with the final dividend for 2012 tumbling to 3.9p per share and the interim dividend for 2013 diving to 2.28p per share.

The trailing payout of 6.18p per share thus supports a possible 6%-plus income following this morning’s share-price movement.

That said, full-year City dividend forecasts ranging from 2.28p per share to 4.9p per share suggest the final dividend for 2013 could be reduced by at least another 33% — or axed entirely.


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> Maynard does not own any share mentioned in this article.