RSA considers sale of Latin-American unit - source

(Adds background, estimated valuation)

LONDON, March 17 (Reuters) - British general insurer RSA is weighing a possible sale of its Latin American business, a source familiar with the matter said on Tuesday, in what would be the group's biggest in a long-running series of disposals.

That followed media reports on Monday that the general insurer was considering a sale of the operations, which are spread across Argentina, Chile, Brazil, Mexico, Colombia and Uruguay. RSA declined to comment.

RSA has been retreating from secondary markets to help shore up its balance sheet and refocus its strategy after an accounting scandal at its Irish unit fuelled a series of profit warnings and bumper cash call.

At its most recent results, the company said it still considered itself to have leadership positions in parts of Latin America as well as Scandinavia, the UK and Ireland (Other OTC: IRLD - news) , and Canada.

While it has shed a number of assets, including a minority stake in its Indian joint venture and operations in China, they were all much smaller than its Latin American operations, which are valued at 500-650 million pounds ($740-$960 million).

Ben Cohen, analyst at Canaccord Genuity (Other OTC: CCORF - news) said, strategically, a sale would leave RSA with a reliance on very mature markets, "which is not a problem as long as you do it well" he said, citing the example of Direct Line.

Cohen said the deal would likely be at a healthy premium to its book value and the best scenario would be if cash was returned to shareholders, although the firm had not flagged any impending windfall and proceeds could be used to build RSA's capital position, which came out weaker than expected at results.

Shares (Berlin: DI6.BE - news) in RSA were a marginal outperformer in a flat FTSE 100, which Cohen said suggested there was some expectation in the market that the business could be put on the block. (Reporting by Simon Jessop; Editing by Sinead Cruise and Keith Weir)