Stephen Hester, the chief executive of insurer RSA, has warned about the impact of Brexit on the insurer’s business as he declared that his turnaround plan has been largely completed.
Operating profits of £523m beat expectations and the shares raced up almost 10% to 433p, making them the second largest riser in the FTSE 100.
Hester took charge of the insurer two years ago after it had issued three profits warnings and revealed accounting irregularities in its Irish arm.
The former chief executive of Royal Bank of Scotland, Hester embarked upon a £1.6bn cash call and a cleanup operation that involved selling off underperforming businesses to focus on the UK, Scandinavia and Canada.
One of the signatories to a letter supporting remaining in the EU published earlier this week, Hester said: “A level playing field between European competitors and ourselves is valuable to us in the long run.”
While the shares remain below the 550p a share offered by rival Zurich before it abandoned its £5.5bn bid last year, they have reached their highest level this year.
Hester said no more bidders had materialised and that the stock market value could still rise. “We believe strongly that RSA can prosper independently, indefinitely into the future, and that we can exceed this valuation on a standalone basis,” said Hester.
He said his “turnaround phase” was “largely complete and we have good prospects of substantial further performance improvement”.
RSA, known for its More Than brand, took a £76m hit from the floods that struck the north of England and Scotland in the winter.
Eamonn Flanagan, an insurance analyst at Shore Capital, said: “And so it is back to the gruel for the management of RSA, away from the fun of the bid to eking out basis point improvements in loss and expense ratios. The 2015 results were better than we and the market had expected.”
The final dividend of 7p took the total payout for 2015 to 10.5p per share.