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Profit slump knocks Royal & Sun shares

ROYAL & Sun Alliance, the insurance group, saw profits slump 72 per cent in the first quarter to pounds 214m because of large loss claims in many countries and continued weakness in commercial rates, writes Andrew Garfield.

The shares fell more than 5 per cent to 520p.

Bob Mendelsohn, chief executive, said nevertheless that with motor insurance rates firming by as much as 15 per cent in the UK and signs of price increases starting to stick in some commercial insurance areas, he was sanguine about a return to profits growth next year.

"I am cautiously optimistic that the first quarter will be the worst quarter of this year," he said.