Royal & Sun Alliance misses targets

| August 13, 2007

Royal & Sun Alliance (RSA), UK’s second-largest commercial insurer, has announced that in spite of reporting better-than-expected first-half profits, it will not achieve its targets for this year.

The group anticipates claims from the summer floods to reach £120 million. The estimate for the June floods in Yorkshire is £55 million while the July floods in Gloucestershire are estimated at £65 million.

Consequently, underwriting profits declined by 16% in the first half of 2007, to £144 million and this will impact on the company’s target of a combined operating ratio of at least 95%, for 2007. For the first half of 2007, RSA posted operating profits of £403 million - a figure well above analysts’ expectations.

However, as part of a cost-reduction programme, jobs losses are expected with an attempt to make savings of £70 million. 500 jobs are expected to go in the UK with 200 likely overseas.

Royal & Sun Alliance write business in 130 countries, providing general insurance products to over 20 million customers worldwide.

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