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RSA plunges as boss quits on third profits warning

by Gavin Lumsden on Dec 13, 2013 at 11:55

RSA plunges as boss quits on third profits warning

The FTSE 100 edged higher providing some relief from the downward momentum of the past six weeks but all eyes were on RSA Insurance Group as the insurer plunged following the sudden resignation of its chief executive.

RSA Insurance Group (RSA.L) shares dived 17% or 18p to 82p after Simon Lee (pictured) stepped down following a third profits warning that confirmed investors' fears of a possible hit to the dividend from the problems in its Irish business.

Chairman Martin Scicluna, who will take on an executive role while Lee's successor is found, said the group would strengthen its reserves by £130 million and pump a similar amount of capital into RSA Insurance Ireland after a review of the division.

Combined with the £25 million in storm damage claims that would be mean a further reduction in 2013 profits, it said. It added that these factors would be taken into account when considering the final dividend for the year.

Shares in RSA have fallen by over a third in 2013, in part because of an unpopular dividend cut by Lee earlier in the year.

The FTSE 100 gained 12 points or 0.2% to 6,456 after yesterday's retreat. Strong recent economic data from the US has inclined more investors to think that the Federal Reserve may start to 'taper' its extraordinary stimulus policies as early as next week.

Chip designer ARM Holdings (ARM.L) led the index, up 4.4% to £10.15 followed by Sports Direct International (SPD.L), recovering 3% after yesterday's slide.

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