Fitch raises RSA's outlook to 'stable'; Affirms IFS at 'A'

Fitch has revised upward RSA’s outlook to “stable” from “negative” and affirmed its Insurer Financial Strength (IFS) rating at “A” and Long-term Issuer Default Rating (IDR) at ”A minus”.

RSA is currently in negotiations about a possible takeover bid from Zurich.

Fitch analyst Graham Coutts said that, though RSA’s outlook now has a ”stable” rating, ”gaining a larger, more diversified and higher-rated parent would ultimately be positive for the ratings”.

Coutts said the upgrade reflects improvements in RSA’s earnings, which “have been restored to a level more commensurate with an “A” rating.”

RSA reported a first half underwriting profit of £101m, against a year-earlier loss of £23m and a combined ratio of 96.9%,versus the year-ago figure of 100.3%.

”The company has undertaken a significant rebalancing of its underwriting portfolio and has shown increased underwriting discipline as evidenced by significant rate increases in underperforming lines,” Coutts said.