What's Next for RSA Insurance?

LONDON -- Insurance company RSA Insurance Group (LSE: RSA  ) , formerly known as Royal and Sun Alliance, has been a longtime Foolish favorite. It is a solid blue-chip business with a low price-to-earnings ratio and a juicy dividend -- all the attributes that we at the Fool have been recommending in recent months and years. It's also the reason why many investors, including me, bought into the company last year.

After languishing for many months, the market has finally warmed to RSA, and the company has been on quite a run recently. From a low of about 100 pence in June 2012, RSA has now risen to 132 pence. This company is proof that high-yielding large caps are the place to be at the moment.

I personally am sitting on a 20% gain and have been wondering whether or not to take profits. I think many other shareholders may be wondering the same.

A solid, dependable company
RSA is a general-insurance company with more than 20 million customers in 36 countries across Asia, Europe, North America, and South America. Its most famous brand in the U.K. is More Than, which offers car, home, pet, and travel insurance.

The latest results, which came out in November 2012, reinforced my view of this being a company that is solid and dependable, if unspectacular. Net written premium of more than 6 billion pounds represented growth of 4%. Emerging markets were up an impressive 15%, and Canada was up 6%. However, the biggest part of RSA's business, the U.K. and Western Europe, showed no growth at all.

I expect the U.K. and Western Europe to bump along without much growth for a while yet, with growth being driven by emerging markets. So, overall, I see slow but steady growth with this company. For us high-yield value investors, this suits us down to the ground.

Will RSA continue its good run?
Despite the company's recent strong run, RSA is still only on a forward P/E ratio of 11, with a dividend yield of 7%. Financials, unloved and unwanted for so long, are now in the midst of a bull market that is gathering momentum. Likewise, high-yield shares have been progressing particularly well in the current global bull run. Thus I feel high-yielding financials such as RSA will continue their good run.

So, as a current shareholder, I continue to hold. If you are interested in buying, this is perhaps one you should put on your watchlist, ready to buy on the dips.

I am a firm believer that high-yield shares should be at the core of an investor's portfolio and that they are likely to be the engine for future stock market growth. The combination of an impressive yield and capital growth can really drive your portfolio. For this reason, we at the Fool are constantly on the look-out for high-yield opportunities. This free report details one particular high-yield opportunity that is worth buying into right now. Please read more about "The Motley Fool's Top Income Share For 2013."


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