Tie up with Zurich seen as positive for ratings

RSA office

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.