RSA to review UK life operation

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The Independent Online
UK INSURANCE company Royal & Sun Alliance announced yesterday that it would conduct a full review of the company's underperforming UK life insurance operations.

The news came as RSA reported a 22 per cent fall in first-half profits caused by rising claims costs in motor, commercial and weather insurance. Group operating profits fell to pounds 315m from pounds 406m in the first half of 1998.

Commenting on the review, the results of which will be announced next month, Royal & Sun's chief executive, Bob Mendelsohn, said: "This is not a job-cutting type exercise but a re-focusing of our activities."

He stressed that any changes made as a result of the investigation would be organic and would involve adopting a more customer-orientated approach to sales and product development.

The company's results gave some cause for optimism, continuing a trend for quarterly improvements. Second-quarter profits rose 17 per cent to pounds 170m from pounds 145m in the first quarter. This figure was also up from pounds 110m in the last quarter of 1998.

Mr Mendelsohn said: "We clearly bottomed out in the third quarter of last year. Profits have been improving quarter-on-quarter since then."

Mr Mendelsohn dismissed suggestions that his group would merge with rival CGU or Germany's Allianz as "purely speculative". He said: "We are concentrating on executing our future strategy. There is no mega-merger in the pipeline."

Fifty per cent of Royal & Sun's business comes from the UK, where the company has substantial market share in the non-life insurance sector, but lags in tenth place in the UK life sector. The company is also active in the US, Scandinavia, Canada, Australia, Ireland and New Zealand.