Moody’s Investors Service announced that it has downgraded its financial strength ratings on the U.K.’s Royal & Sun Alliance by two levels from ‘A1’ to ‘A3’ and its commercial paper ratings by one level from ‘P-1’ to ‘P-2.’
The rating agency cited the insurer’s recent investment losses and weakened capital base as the principal reasons for the downgrade. Last August both Standard & Poor’s and A.M. Best took similar actions concerning R&SA’s financial strength.
The company’s CEO, Bob Mendelsohn, was forced to resign last month following a series of adverse developments. Moody’s indicated that the uncertainty surrounding his replacement and the direction the company will take had added to anxieties about its future.
It also noted that efforts to rebuild its capital structure, begun under Mendelsohn, would be further impeded by the current weakness in the financial markets, which has substantially lowered the value of some of the assets R&SA is planning to sell to raise cash.
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