Fitch ratings has lowered Royal & SunAlliance's (R&SA) long-term rating to 'BBB' from 'A-'. The ratings outlook is negative.
The agency suggested the downgrade was in response to the group's limited options for improving its financial position.
The ratings agency cited the company's high risk strategy as the reason for lowering its ratings. R&SA had planned to achieve a 10% net real return on its risk based capital and a 103% combined ratio.
An agency spokesman said: "The agency believes neither target will be met in the short to medium-term group. Fitch was expecting a combined ratio close to 13% based on a q1 result og 104.6%."
Fitch painted a less than positive picture for the insurer with the warning that future returns will fall below expectations. A spokesman said: "The agency believes pressure will remain on the group's capital base to support income levels.
"Long-term this could result in a diminution of the group's market share."
