November 8, 2002 by Canadian Underwriter
Royal & SunAlliance is making some sweeping changes in light of continued financial troubles. The company has announced results of a financial review that will see it exiting under-performing lines of business.
The group says it will continue to focus on general insurance, having already sold off much of its life operations.
As for Canada, a press release notes, “In addition to the radical plans for the U.K. and U.S., other parts of the group are also undertaking underwriting improvement and disposal activity. This will include in Canada a particular focus on moving to speciality and aggressively realigning our unprofitable personal lines auto business, in specific markets.”
The group plans to release its Asia-Pacific operations through an IPO, and selling off several other non-p&c divisions such as its U.S. surplus lines operation. As well, the company will cut its U.S. staff by about 800.
These moves are expected to release about 3.5 billion pounds (Cdn$8.7 billion) in premiums, a move which the group says will make in unnecessary to raise capital through a share offering or other external means. The restructured operations will require 3.6 billion pounds (Cdn$8.5 billion) of capital, the group calculates.
The changes come on the back of RSA’s announcement that it would lose 156 million pounds (Cdn$388 million) for the first nine months of the year.
Former Canadian operations CEO, now acting group CEO Bob Gunn says, The program of actions that we are outlining today is radical but achievable with a sharp focus on profit Firstly, we can confirm the strengthening of our capital position. Secondly, we can confirm our strategy of focussing on general insurance and our target of a 10% net real return on capital. Finally, we will significantly change the overall shape of the group and we will aggressively target those areas of general insurance where we believe we have competitive advantage and will be able to deliver consistent returns.”