Rating agency Fitch has downgraded the insurer financial strength ratings of Royal & Sun Alliance Insurance (RSAIP) and its US insurance subsidiaries to 'BBB plus' from 'A minus'.

Fitch also downgraded RSAIP's long-term rating to 'BBB minus' from 'BBB', and the rating on the junior subordinated debt issued by Royal & Sun Alliance Insurance Group plc (RSAIG) to 'BB plus' from 'BBB minus'.

Fitch said the downgrades reflect concern over the group's
ability to execute its strategy. The agency highlighted four areas for concern, including:

  • Casualty Reserving. Despite already stating that general provisions need to be increased by £250m, Fitch raised concerns that future reserve strengthening above this level may be required.

  • Asbestos and environmental provisions. The agency said it had concerns about the group's ability
    to set adequate reserves in the future.

  • Group Pension Fund. Fitch recently stated that the pension scheme deficit represents, "a further challenge to capitalisation for an industry already facing a number of short-term negative pressures."

  • Capital. The agency raised concerns over the group's weak capital position.

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