Royal & SunAlliance received a boost after Standard & Poor’s (S&P) raised the insurer’s financial strength rating to ‘A’ from ‘A-’.

The rating agency agency said it increased the insurer’s rating because of its confidence in the group’s underwriting cycle manage-ment and its ability to produce consistently positive earnings.

S&P said it had a positive opinion about R&SA’s management and corporate strategy. The group also had a strong competitive position.

However, the rating agency said these positive factors were partly offset by R&SA’s capitalisation and financial flexibility that, despite improvement, were not yet consistent with the new rating level.

S&P said: “We expect R&SA’s management to remain committed to its strategy of sustainable profitable performance, underpinned by its strong enterprise risk management, and will continue to produce combined operating ratios in the mid-90s.”

The rating agency said it expected the insurer’s net combined ratio for 2008 to be 98% or better.