Should I Buy RSA Insurance Group?http://www.fool.com/investing/international/2012/10/05/should-i-buy-rsa-insurance-group.aspx Harvey Jones, Fool U.K.
October 5, 2012
LONDON -- It's time to go shopping for shares again, but where to start? Recovering oil major BP? Banking bad boys Barclays? Or tumbling Tesco?
There are plenty of great stocks to choose from, and I'm enjoying doing some window shopping. So here's the question I'm asking right now: Should I buy RSA Insurance Group (LSE: RSA.L ) ?
Feel that yield
The U.K.'s biggest commercial insurer is currently trading on an almighty yield of nearly 8.2%, more than 16 times the Bank of England base rate. That makes it the second-best dividend payer in the FTSE 100, narrowly beating insurer Aviva, which yields 7.95%. Only Resolution yields more, at 9.35%
Why leave a penny in cash when you can get that kind of return from a FTSE 100 stalwart, plus any capital growth on top? Well, let's see...
Pre-tax profits fell nearly 40% to 164 million pounds in the six months to 30 June, down from 277 million pounds in the same period last year. Net written premiums rose a modest 2% (or 4% at constant exchange rates), although that marks a slowdown from the first quarter, when they were 5%.
RSA expects 70% of group premiums to come from overseas by 2015, including Latin America and the Middle East, where it is rapidly expanding. It has also enjoyed strong growth in Scandinavia and Canada.
Group chief executive Simon Lee remains confident of a good full-year performance, despite the tough economic conditions. Providing the weather holds, that is.