Royal & Sun Loss Sees Stock Rise

Royal & Sun Loss Sees Stock Rise

NU Online News Service, Aug. 12, 2:55 p.m. EDT?Royal & Sun Alliance suffered a $91 million reduction in profits in the first six months of 2004 compared to last year, but traders reacted positively to the less than expected loss.[@@]

Stock in RSA rose 5 percent in Thursday morning trading in London as traders reacted to the news.

The U.K.-based insurer reported profits of ?301 million ($550 million U.S.) for the first half of the year, compared to ?351 million ($641 million U.S.) in the first half of 2003. Net premiums written in the period decreased to ?2.5 billion ($4.6 billion U.S.) from ?3.7 billion ($6.9 billion U.S.) in 2003.

RSA last year raised capital after running up large losses, and has been cutting written premiums and disposing of non-core operations in an effort to reposition itself as a seller of general insurance in the U.K., Scandinavia and Canada.

The combined ratio deteriorated slightly to 99.7 percent in the first half of this year compared to 99.3 percent last year. But it improved in three core markets, and for ongoing business the rate was 93.6 percent.

The company recently sold its closed UK life book of business, its Scandinavian life business, and is exiting most of its U.S. operations.

Company executive Andy Haste said in a statement that there would be no further transfer of its contingent liability, which was cheered by analysts as it was seen as strengthening reserves.