The U.K.’s Royal & Sun Alliance reported that group operating results were $472 million for the first nine months of the year, compared with $738 million for the same period last year, a 36 percent drop.
Most of the decrease was attributed to a loss in the third quarter, resulting from the Sept. 11 attacks, which saw claims in excess of £200 million ($ 294 million). RSA indicated that the WTC loss figures “masked the good performance of many parts of the Group’s property and casualty insurance business.”
The report noted that worldwide p/c premiums grew by 5 percent in the first nine months of 2001 to $9.8 billion ” due to strong rate increases achieved throughout the Group. RSA’s U.S. subsidiary, reported net written premiums of $2.538 billion for the first three quarters of the year, compared to $2.307 billion in the same period last year, a 10 percent increase.
RSA’s strategy is aimed at increasing its p/c market share in the U.S. and the other 130 countries it operates in. It has announced that in order to raise capital it was considering the sale of “non-core” assets, beginning with its U.K. life insurance business. The Sept. 11 losses have increased the pressure on RSA’s CEO Bob Mendelsohn to take action, both to restore the amounts paid in claims, and to position the company to take advantage of premium increases and higher demand for insurance coverage.
RSA had announced that it was considering a £1 billion ($1.47 billion) rights issue, but that plan has apparently been shelved. It now plans to free up around £800 million ($1.17 billion) in capital by selling or discontinuing non- performing or under-performing operations. It’s also considering reducing dividend payments, or canceling the final dividend payment, which would release about £250 million ($367 million) for investment.
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