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Blow for RSA amid rights issue bid

SHARES in RSA Insurance Group have fallen after the global insurance giant confirmed it was mulling a rights issue to bolster its balance sheet.

RSA, which hired former Royal Bank of Scotland boss Stephen Hester as chief executive this month, was responding to reports it will seek to raise up to £800 million to shore up its capital position.

The company has already signalled profits will be affected by factors ranging from severe weather in Canada and Europe to an accounting scandal at its Irish operation.

The scandal at RSA Insurance Ireland centred on financial and claims irregularities totalling £72m, with a probe by PwC finding that "inappropriate collaboration relating to claims irregularities amongst a small number of senior executives in Ireland undermined control effectiveness".

Three senior executives have left since the scandal, which continues to be probed by regulators, first broke.

Mr Hester is reportedly preparing to sell several businesses across eastern Europe, Asia and the Middle East to raise capital under a review which commenced after the departure of previous boss Simon Lee, leaving RSA to focus on its core operations in the UK, Scandinavia and Canada. There has also been speculation he will scrap the dividend.

The company said yesterday: "RSA is considering measures to strengthen its balance sheet including raising capital by way of a rights issue, however no final decision has been made by the company at this time."

Shares in RSA closed down 3.7p at 97.5p.

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