RSA upgraded to A by S&P as strategic actions are undertaken

RSA has welcomed the decision by Standard and Poor’s to upgrade its rating to ‘A’ with a stable outlook following a rights issue and wider strategic actions undertaken by the insurer.

S&P pointed to "a number of positive financial developments at RSA" since its previous rating action on 16 December last year, including the announcement of its intention to launch a fully underwritten £775m rights issue, new strategic action plans involving disposals of non-core businesses, and the recent execution of various other management actions.

The ratings agency believes that overall these actions will result in a "material improvement" in RSA's prospective balance sheet strength.

An S&P statement read: "We are therefore raising our financial strength and issuer credit ratings to 'A' from 'A-' on RSA's core subsidiaries and removing the ratings from CreditWatch with developing implications.

"The stable outlook reflects our expectation that RSA will emerge from its recent turmoil in a much stronger financial position, supported by management's commitment to maintaining a materially strengthened and better quality capital base, and with a more-focused strategy around core markets. If the rights issue does not proceed as expected, we may lower the ratings by at least one notch."

In response to the revised rating, Richard Houghton, RSA group chief financial officer, pictured, said: "This is recognition that the combination of the actions that we have already undertaken, together with the rights issue we announced yesterday, will result in a 'material improvement' in our balance sheet strength and provides the capacity to execute our strategic plans.

"The stable outlook also reflects S&P's confidence that RSA will re-emerge in a much stronger financial position with a clear commitment to maintaining a strong capital base with a clear strategic focus on core markets."

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• Topics
• RSA Group
• Standard & Poor's (S&P)
• Insurer