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Royal & SunAlliance Sells Renewal Rights of Most US Businesses to Travelers.

Business Editors


Royal & SunAlliance (NYSE:RSA) (LSE:RSA) today announced a definitive agreement to sell the renewal rights for the majority of its US businesses to Travelers Property Casualty Corp. Business lines included in the sale are the company's Standard & Preferred Personal Lines, Risk Management casualty & domestic property, Marine and Middle Market Segments. In 2002, net written premiums for these businesses were $1.5 billion.

The sale is part of a strategic shift by Royal & SunAlliance worldwide to refocus operations on those markets and businesses where it has a leading position, primarily the United Kingdom, Scandinavia and Canada.

Royal & SunAlliance USA business lines not included in the sale are Non Standard Auto Personal Lines, DPIC, Grocers Insurance, Risk Management global property, Asia Branch and SJA Agency. The company is considering a range of options with respect to these businesses, including further renewal rights transactions and disposals.

"This transaction represents a good opportunity for our businesses and customers, given Travelers' strong capital position and well-known service orientation," said Steve Mulready, Royal & SunAlliance USA president and CEO. "Yet, this is a difficult announcement to make. Royal & SunAlliance has a proud heritage in the US insurance market -- but now our presence will significantly change.

"Our restricted capital position has challenged us over the past two years. Nevertheless, our employees stepped up to that challenge and brought our company back to a level of success that makes this sale possible. We now have the opportunity to work with our counterparts at Travelers to ensure a smooth transition for our customers and producers. And we will continue to support those businesses remaining with Royal & SunAlliance."

Royal & SunAlliance will retain current policies in force until renewal as well as all liabilities associated with expired policies. The company will maintain a US operation to support and service these policies and pursue options for its remaining US businesses. An unspecified number of positions are also expected to transfer to Travelers.

Global Redirection

The actions announced by Royal & SunAlliance today are the result of an extensive business and capital review launched by Group Chief Executive Andy Haste in May. Worldwide, the company is creating a more focused business, with commercial operations being weighted toward property coverages and personal lines focusing on direct distribution and selected intermediated lines.

The company also announced a rights issue today as part of a process to further strengthen its balance sheet. "The components of a winning business exist, but much more needs to be done for that potential to be realized," said Group Chief Executive Andy Haste. "The rights issue we are announcing today will allow us to grow the profitable parts of our business identified by our review. We believe that, consistent with our overall strategy, the restructuring of our US operations will allow us to allocate capital and management resources more effectively to our chosen markets."

Half-Year Results

Royal & Sun Alliance Insurance Group plc, the parent of Royal & SunAlliance USA, today reported a six-month operating result of $579 million, up from $496 million for the corresponding period in 2002 (351 million pounds and 301 million pounds, respectively, on a UK reporting basis with an exchange-constant rate of 1.65). Globally, the company reported net written premiums of $6,029 million (3,654 million pounds) and a combined operating ratio of 99.3%, vs. $7,042 million (4,268 million pounds) and 104.6% for half-year 2002.

Royal & SunAlliance USA also improved its half-year combined ratio (the ratio of expenses plus claims payments to premiums) to 107.4% from 111.2% for the first six months of 2002. The US operation increased 2003 net written premiums to $1,639 million vs. $1,524 million for the corresponding period in 2002.

About Royal & SunAlliance USA

Royal & SunAlliance USA ( provides risk management and insurance solutions through two divisions focusing on property & casualty business and personal insurance. The company is part of London-based Royal & Sun Alliance Insurance Group plc (LSE: RSA; NYSE: RSA), one of the world's leading multi-line insurers.

Important Disclaimer

This document contains forward-looking statements as defined in the U.S. Private Securities Litigation Reform Act of 1995. It contains forward-looking statements and information relating to the Company's financial condition, results of operations, business, strategy and plans, and general industry outlook based on currently available information. These statements are often, but not always, made through the use of words or phrases such as 'is considering', 'expects', 'believes', 'anticipates', 'estimated' and 'intends'. The specific forward-looking statements cover, among other matters, options for our remaining businesses and our restructuring program. Such statements are inherently subject to certain risks and uncertainties. Actual future results and trends could differ materially from those set forth in such statements due to various factors. Such factors include general economic conditions; the frequency, severity and development of insured loss events arising out of catastrophes; as well as man made disasters; the availability, pricing and ability to collect reinsurance; the ability to exclude and to reinsure the risk of loss from terrorism; mortality and morbidity experience and trends; policy renewal and lapse rates; fluctuations in interest rates; returns on and fluctuations in the value of fixed income investments, equity investments and properties; fluctuations in foreign currency exchange rates; rating agency actions; changes in laws and regulations; judicial decisions and rulings and general competitive factors, and other risks and uncertainties, including those detailed in the Company's filings with the U.S. Securities and Exchange Commission and the UK Listing Authorities. The Company does not assume any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.
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Publication:Business Wire
Geographic Code:1USA
Date:Sep 4, 2003
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