2012-09-21 16:27:30 -

A.M. Best Europe – Rating Services Limited has affirmed the financial strength rating (FSR) of A (Excellent) and issuer credit ratings (ICR) of “a” of the main UK operating subsidiaries of RSA Insurance Group plc (RSA) (United Kingdom). A.M. Best also has affirmed the ICR of “bbb” of RSA, the non-operating holding company of the RSA group of companies, as well as the debt ratings of RSA, which are guaranteed by Royal & Sun Alliance Insurance plc (United Kingdom), and the preferred stock issued by RSA. The outlook for all ratings is stable. At the same time, A.M. Best has withdrawn the ratings as the company has requested to no longer participate in A.M. Best’s interactive rating process. (Please see

below for a detailed listing of the companies and ratings.)

The affirmation of the ratings of RSA’s operating subsidiaries reflects the group’s consistently profitable operating performance and excellent business profile in its core markets. An offsetting rating factor is the level of consolidated risk-adjusted capitalisation, which although likely to remain good, has been reduced in recent years by a relatively high dividend payout ratio to shareholders and reducing bond yields.
Moreover, the group’s organic growth plans and acquisitions in recent years have been supported only by internal capital generation, which also has reduced its risk-adjusted capital position, particularly through purchased goodwill.

Further material deterioration in consolidated risk-adjusted capitalisation is not considered likely, as the group’s good operating performance in 2011 led to a modest rise in shareholders’ funds, and the half-year financial report to 30 June 2012 shows a good operating performance, with strong performances in Scandinavia and Canada, which are partially offset by the impact of adverse weather in the United Kingdom and earthquakes in Italy. Additionally, the proposed dividend reflects a revised policy that will help to preserve the group’s risk-adjusted capitalisation.

The FSR of A (Excellent) and ICRs of “a” have been affirmed and withdrawn for the following subsidiaries of RSA Insurance Group plc.

- Royal & Sun Alliance Insurance plc
- Royal & Sun Alliance Reinsurance Limited
- Sun Insurance Office Limited


The following debt ratings have been affirmed and withdrawn.



RSA Insurance Group plc (guaranteed by Royal & Sun Alliance Insurance plc)—-- “bbb+” on GBP 500 million 9.375% subordinated notes, due 20 May 2039-- “bbb+” on USD 23,679,000 8.95% subordinated notes, due 15 October 2029-- “bbb+” on GBP 450 million 8.5% perpetual subordinated notes-- “bbb+” on GBP 375 million 6.701% perpetual subordinated notes

The following debt rating has been affirmed and withdrawn.



RSA Insurance Group plc—-- “bb+” on GBP 125 million 7.375% preferred stock

The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best’s rating process and contains the different rating criteria employed in the rating process. Key criteria utilised include: “Risk Management and the Rating Process for Insurance Companies”; “Catastrophe Analysis in A.M. Best Ratings”; “Understanding BCAR for Property/Casualty Insurers”; “Understanding Universal BCAR”; “Rating Members of Insurance Groups”; and “Insurance Holding Company and Debt Ratings”. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology : cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2Fwww .. .


In accordance with Regulation (EC) No. 1060/2009, the following is a link to required disclosures: A.M.

Best Europe - Rating Services Limited Supplementary Disclosure : cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2Fwww .. .


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Best Company. Founded in 1899, A.M. Best Company is the world's oldest and most authoritative insurance rating and information source.

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