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BEST'S CREDIT RATING ACTION

Best’s News & Research Service - December 17, 2021 11:08 AM (EST)

AM Best Assigns Credit Ratings to Royal & Sun Alliance Insurance Limited

  • December 17, 2021 11:08 AM (EST)

London //BestWire// - AM Best has assigned a Financial Strength Rating of A (Excellent) and a Long-Term Issuer Credit Rating of “a+” (Excellent) to Royal & Sun Alliance Insurance Limited (RSAI) (United Kingdom). RSAI is the principal operating subsidiary of RSA Insurance Group Limited (RSA), the non-operating holding company of the RSA group, ultimately owned by Intact Financial Corporation (IFC). The outlook assigned to these Credit Ratings (ratings) is stable.

The ratings of RSAI reflect RSA’s consolidated balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile, and appropriate enterprise risk management. In addition, the ratings consider, in the form of lift, the support of its parent company, IFC.

RSA’s balance sheet strength is underpinned by the strongest level of risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR). In addition, the balance sheet strength assessment reflects the company’s good and improving quality of capital, conservative investment portfolio, which principally comprises fixed income securities, and strong liquidity position.

RSA has a track record of modest underwriting and investment results in its U.K. and international (UK&I) operation, its principal portfolio following the transfer of Scandinavian and Canadian business outside the RSA group in June 2021. RSA reported a small improvement in the combined ratio for its UK&I operation to 94% in 2020 from 95% in 2019, excluding the exited business lines and the 2020 reserve strengthening for claims related to COVID-19. AM Best expects underwriting performance to continue improving despite challenging conditions in RSA’s main U.K. market, helped by a focus on risk selection and ongoing portfolio pruning. Investment income supports overall earnings with a positive, albeit small, contribution.

RSA benefits from a strong market position and well-recognised brand in the U.K. non-life insurance market in personal and commercial lines of business. The UK&I business is concentrated in the competitive U.K. insurance market. This geographic concentration is mitigated partially by good diversification by line of business and by a profitable and well-diversified international portfolio. Going forward, moderate premium growth is expected, with RSA expected to leverage on IFC’s pricing and data analytics in the medium term.

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specialising in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.



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