Group News
A.M. Best rating news
2/26/2009 - A.M. Best Upgrades Ratings of the Main UK Operating Entities of RSA Insurance Group plc
OLDWICK, N.J., FEBRUARY 26, 2009
A.M. Best Co. has upgraded the financial strength ratings (FSR) to A (Excellent) from A- (Excellent) and the issuer credit ratings (ICR) to "a" from "a-" of the rated UK operating subsidiaries of RSA Insurance Group plc (RSA) (United Kingdom). At the same time, A.M. Best has upgraded the ICR to "bbb" from "bbb-" of RSA, the non-operating holding company of the RSA group of companies. A.M. Best has also upgraded the ratings of RSA's debt instruments, which are guaranteed by Royal & Sun Alliance Insurance plc (United Kingdom), and the preferred stock issued by RSA. (See below for a detailed list of ratings). The outlook for all ratings is stable.
RSA's ratings have been upgraded due to sustained improvement in the group's consolidated risk-adjusted capitalisation. This improvement has been supported by RSA's excellent financial results in 2008, including a 25% increase in shareholders' funds deriving from solid retained earnings, a rise in the group's pension scheme surplus and foreign exchange gains.
A.M. Best believes that RSA's strong financial performance at year-end 2008 will be maintained in 2009. Year-end 2008 results were supported by solid investment performance, which outperformed A.M. Best's expectations given the impact of weak economic conditions on the financial markets. Solid investment income from the group's conservative investment portfolio, combined with gains from its various hedging strategies and asset sales, more than offset investment losses incurred during the year. Year-end 2008 results were also supported by excellent underwriting performance, with the group benefitting from further expense savings through improved operational efficiencies and lower weather-related losses, which impacted 2007 technical performance.
RSA also benefits from its excellent business profile, which supports its distinct competitive advantage within its segment of the market. The UK continues to be RSA's core market (representing 42% of consolidated net premium income in 2008), where it maintains a strong position within the commercial and personal lines segments of the market. Modest growth was achieved in this region in 2008, supported by some rate increases and solid retention rates. However, the sustained competitive environment continues to limit development in the UK. RSA also maintains a strong position in certain international markets (particularly in Scandinavia and Canada) and continues to develop its presence within the emerging markets. An increase in consolidated net premium income of 11% in 2008 to GBP 6,462 million (2007: GBP 5,837 million) largely derived from growth in RSA's non-UK business. In 2009, A.M. Best anticipates a modest rise in net premium volume, reflecting some improvement in rates across RSA's core market.
A.M. Best has upgraded the FSR to A (Excellent) from A- (Excellent) and the ICR to "a" from "a-" of the following subsidiaries of RSA Insurance Group plc:
-- Royal & Sun Alliance Insurance plc
-- The Globe Insurance Company Limited
-- Sun Insurance Office Limited
-- The London Assurance
-- Royal & Sun Alliance Reinsurance Limited
-- Sun Alliance and London Insurance plc
The following debt ratings have been upgraded:
RSA Insurance Group plc (guaranteed by Royal & Sun Alliance Insurance plc)—
-- to "bbb+" from "bbb" on EUR 200 million 6.875% subordinated notes, due 15 October 2019
-- to "bbb+" from "bbb" on EUR 300 million floating rate subordinated notes, due 15 October 2019
-- to "bbb+" from "bbb" on USD 23,679,000 8.95% subordinated notes, due 15 October 2029
-- to "bbb+" from "bbb" on GBP 450 million 8.5% perpetual subordinated notes
-- to "bbb+" from "bbb" on GBP 375 million 6.701% perpetual subordinated notes
The following rating on preferred stock has been upgraded:
RSA Insurance Group plc—
-- to "bb+" from "bb-"on GBP 125 million 7.375% preferred stock