Fitch also puts the insurer’s financial strength rating on negative watch

Ratings agency Standard & Poor’s (S&P) has cut RSA’s credit rating to its lowest level in more than a decade and warned another downgrade could be possible.

The insurer’s financial strength rating was dropped from A to A- overnight, which is its weakest level since 2002 when it launched a near-£1bn rescue rights issue to recover from an asbestos-induced crisis.

RSA’s three profit warnings within six weeks and the resignation of its group chief executive Simon Lee “indicate some weaknesses in management and governance generally”, S&P said.

Responding to the downgrade, RSA chief financial officer Richard Houghton said: “We note S&P’s decision and will continue working closely with them as we undertake a full review of our businesses in order to improve the capital strength of the group and optimise the group’s business portfolio.

“We believe that today’s decision will have no material impact on the group’s operations, our customers or our ability to trade.

“RSA continues to be a leading insurance brand with enviable market positions across the globe and attractive businesses with healthy underlying profitability. We remain confident that RSA will re-emerge as a stronger group in 2014.”

Despite these assertions, ratings agency Fitch has also put RSA’s financial strength rating on negative watch after further concerns were raised about the insurer’s ability to maintain its position in the market.

Fitch warned that a delay in appointing a new chief executive would further damage the company, which saw its share price fall to 90p yesterday.

“Some of RSA’s key financial metrics are weaker than its ratings would suggest,” Fitch said.

It added that “renewed uncertainty regarding the ability of RSA to restore its capital position through retained earnings growth” also contributed to the decision.

There are also reports that RSA may be forced to put itself up for sale and interested buyers could include AXA, Allianz and Zurich.