Zurich has proposed paying RSA shareholders 550p per ordinary share and allowing them to receive the 3.5p interim dividend announced by RSA on 6 August this year.
In late morning trade on Tuesday RSA shares were around 517.5p, up 4.5% on the day.
RSA said: “The Board has indicated to Zurich that it would be willing to recommend an offer at the level of the Possible Offer to RSA shareholders subject to the satisfactory resolution of the other terms of the offer.”
The transaction remains subject to due diligence and a formal recommendation by the Board. UK regulators have given Zurich until 22 September to make a firm offer.
Under the UK takeover code, Zurich had until the close of business on Tuesday to make an offer for RSA after indicating late last month that it was considering a bid.
The proposed offer from Zurich comes just weeks after RSA reported solid progress in its efforts to rebuild profitability under a turnaround plan led by group chief executive Stephen Hester, the former head of the Royal Bank of Scotland, who took up the job last year.
Prior to Hester’s arrival the group had suffered from an accounting scandal in Ireland and various regulatory investigations.
Under Hester’s leadership over the past 18 months RSA has sold off various arms of its business, including its China insurer Sun Alliance, its Indian joint venture stake in Sundaram Finance and operations in Singapore and Hong Kong. It also announced the disposal of it UK Engineering Inspection business.
It total the company expected to raise around £835m from the sales announced to date.
If the takeover deal is approved, the London based insurer will be bringing its core assets in the UK, Ireland, Scandinavia, Canada and Latin America to the Zurich group in what would be one of Europe’s biggest insurance deals.