The Investment Column: Haste's transformation has tamed the risk at Royal & SunAlliance

Andy Haste, the chief executive of Royal & SunAlliance, celebrates three years at the helm of the insurer next month, during which time he has transformed the company.

Having either sold out of, or closed down, the group's riskiest operations, RSA is now adequately capitalised and on a stable footing for the first time in a long while. This turnaround has been no more striking than in the US, where the group reduced its losses to just £29m last year, from £372m in 2004, and cut its headcount by 60 per cent.

Having sharpened up its underwriting discipline and cut costs from across the business, the group has even made small bolt-on acquisitions when the right opportunities arise. Only two years ago, it was doing everything it could just to fulfil the regulator's solvency requirements.

While the City has eagerly watched Mr Haste's restructuring from the sidelines, confidence in the stock has been thin on the ground for much of the past few years. However, with the shares having climbed almost one-third in the past six months, it would seem that perceptions have finally turned the corner.

Although the company still has some legacy asbestos claims to deal with in the US - which, as Mr Haste said yesterday, "will not be a totally smooth ride" - these are unlikely to provide the kind of major upset that investors could have feared three years ago.

With insurance premiums still softening in most sectors in which RSA operates, Mr Haste concedes that the year ahead is likely to be challenging. But last year was also far from easy, yet RSA managed to write profitable business. This proves it can weather the storm.

Although this stage in the insurance cycle might not normally be the ideal time to increase exposure to the UK's largest general insurer, the group has been severely undervalued over the past few years. With the major risks behind it, and the share price beginning to climb, RSA is a buy.

Inmarsat

Inmarsat's first annual results since coming to market were well received by the City yesterday. Shares in the satellite operator rose 12.5p to 383p after it posted a 5 per cent rise in earnings before interest, tax depreciation and amortisation. This performance was supported by more ships using the company's technology, a result of booming international trade and the fact natural disasters across the world forced people to turn to satellite communications.

However, Inmarsat's potential growth is the really exciting thing about the company. It recently launched broadband global area network (BGAN). This gives users access to the internet from pretty much anywhere in the world (Inmarsat's satellites cover 85 per cent of the world's land mass excluding only the Poles). It also permits data and video images to be transmitted so, for example, a journalist can file copy, talk on the phone and send live video images to his office from any part of the globe. Inmarsat is already enjoying strong demand for BGAN and expects the service to account for one-third of total revenues by 2010.

The group also continues to pursue talks with US mobile and fixed-line operators about allowing them to use its satellites to fill holes in their networks. These usually exist in remote areas and would see telecom companies piggyback off Inmarsat's satellites in return for a fee. Analysts believe such agreements could be hugely profitable for the company and could send its shares into orbit. Buy.

Umbro

There is little doubt that 2006 is going to be a good year for Umbro. The football World Cup in Germany is set to be a major money-spinner for the sportswear group, with sales of England replica shirts to be key. The fact that the company's order book is already 95 per cent pre-sold is a bullish sign.

Umbro's annual results yesterday revealed a 5.4 per cent rise in profits to £23m, which is an impressive performance given that 2005 was not a tournament year. The group's sales increased 1 per cent to £351m.

The figures also showed that Umbro has debt of £16m. Over the next 12 months City analysts expect this to be eliminated, raising the possibility of acquisitions. Last year Umbro bought a minority stake in its Chinese joint venture partner, and further deals could well be on the cards.

China is already a major growth market for the company. It enjoyed a 68 per cent rise in sales there last year and the country now accounts for nearly 10 per cent of its total sales. The group expects to to build on this significantly in the future and investors should not be surprised if China once again plays host to investment by the company.

Umbro shares have gained 67 per cent since their flotation in 2004. Yet they trade at just 12 times forward earnings. That is not expensive and readers would do well to hold on for further gains.