Insurance ratings agency AM Best has downgraded the financial strength rating of the Royal & SunAlliance Insurance Group to A (Excellent) from A-plus (Superior).
The outlook continues to be negative.
The agency said the ratings reflected R&SA's "reduced but still healthy risk-adjusted capital base, modest levels of long-term debt, improving operating performance, positive pricing environment for the major lines of its core book and its excellent business position in its key markets".
It added that offsetting factors included the ongoing potential for reserve deterioration in its US operations and increased exposure to short-term borrowings.
"The negative outlook has been maintained, given the near-term uncertainties surrounding the group's reorganisation of its risk profile and US reserve review," it said.
AM Best expects these uncertainties to be sufficiently clear by mid-2002 for the outlook to be reassessed.
The "a" and "a-minus" ratings of the group's subordinated debt and preferred stock have also been downgraded to "bbb-plus" and "bbb", respectively.
