Good news and bad from RSA

By THIS IS MONEY
Updated:

 

ROYAL & SunAlliance took another step towards recovery today by posting third-quarter profits ahead of the most optimistic City expectations.

But chief executive Andy Haste sent a shudder through the market by revealing yet more adverse claims from the previous year could hit its troubled US arm - igniting concerns about the adequacy of its funding to meet these claims.

But Haste said there was no reason yet to boost reserves: RSA has set up a £200m contingent liability to cover claims arising in the US as it clears up the business.

Operating profits in the three months to 30 September came in at £453m, against just £27m a year when RSA booked a slew of exceptional charges.

Haste said: 'We set out 18 months ago what we needed to do, and the good thing is we have delivered.' Claims from the US hurricane season totalled £14m.

The United States, where Royal & Sun has a large claims exposure, has been the group's Achilles heel for a number of years, and the group is unwinding most of its operations there.

Last year, the company was forced to tap shareholders for nearly £1bn pounds, largely to meet potential asbestos-related claims in North America.

'There is no silver bullet. We don't expect it to be a smooth ride in the United States,' Haste said, adding that the group did not expect to be affected by New York Attorney General Eliot Spitzer's probe into insurance fees.

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