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Royal & Sun to cut 500 UK jobs

08/08/2007

Royal & Sun Alliance (RSA) has announced plans to cut 500 UK jobs as part of a £70 million cost-cutting plan.

Britain's second-largest non-life insurer announced a total of 700 job cuts despite reporting better-than-expected first-half profits.

Nonetheless RSA's overall operating profit fell to £403 million in the six months to June 30th, with the company revealing that underwriting profits had dropped in the wake of the recent floods in Britain.

The insurer expects the June and July floods to cost the company a total of £120 million, with the firm warning that it would subsequently not hit its target of achieving a combined ratio -a key operating benchmark – of 95 per cent or better for the year. RSA now expects to deliver a combined ratio of 96 per cent for the full year.

However the company said that its outlook remained "positive", revealing that it had achieved an annualised savings target of £130 million ahead of schedule.

Company bosses now plan to achieve cost savings of £200 million by mid-2008 and have confirmed that £70 million of the total is to be met by cutting jobs.

RSA chief executive Andy Haste confirmed to reporters that 500 of the 700 redundancies will come from the insurer's business in the UK, which the company has described as its most competitive market.

Unveiling the group's first-half performance, he stressed that the company had achieved good results despite the "challenging market conditions" and was confident about its prospects for 2008 and beyond as a result of the actions being taken by its management.

"The results have been delivered against the backdrop of the UK floods in June, as well as adverse weather and increased large losses across the group, and clearly demonstrate the benefit of management actions and the strong and diversified portfolio," Mr Haste said.

RSA said that as a demonstration of its confidence in the future earnings of the group, the company's board were increasing the interim dividend payment to 2.48 pence, up 42 per cent on the same period for the previous year.





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