Royal & SunAlliance performance not acceptable, says Mendelsohn

The insurance group Royal & SunAlliance yesterday admitted that 2001 was a disappointing year and that even apart from one-off hits, its performance was unacceptable.

The company's shares slumped 5 per cent to a five-year low of 261p, as it cut its dividend and failed to report progress on disposals. Operating profits came in at £16m for last year compared with a restated £462m for 2000, after heavy a terrorism loss and asbestos provisions.

RSA missed its promised 103 per cent operating ratio – a measure of profitability from purely writing policies.

Bob Mendelsohn, RSA's chief executive, said: "Overall our underlying combined ratio of 104.7 per cent [excluding the cost of the World Trade Centre, discontinued businesses and disposals, as well as asbestos-related and environmental provisions], does not meet our target and is obviously not at the level that I find acceptable."

RSA said it was on track to raise £800m from disposals this year, which will pay for its growth plans, but it had no update on these deals. The life business also remains for sale, a process that will not have been aided by yesterday's figures.

RSA took a loss of £215m over the attack on the World Trade Centre and provisions of £384m for asbestos and discontinued businesses.

"As time progresses we can have more faith in our estimates of the cost of the WTC tragedy but it is still too early to be categoric that there will be no further developments in the overall cost," Mr Mendelsohn said.