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R&SA set to shelve life sale as it eyes general insurance

Royal & Sun Alliance is exp-ected to shelve plans to sell its life business this week when it announces its nine months&#39 figures on Thursday.

The insurance giant is looking to raise capital to support growth in the booming general insurance market.

The company will ann-ounce a number of options to raise the cash, which may include dividend cuts, running the risk of potentially lowering its credit rating.

R&SA was aiming for a £2bn sale of its life and fund management arms earlier this year but has so far failed to find a buyer.

It is understood that the company will defer its plans for the life business in light of the current market conditions.

Analysts say R&SA would not have to find ways of raising capital for its general business if it had managed to sell its life book. The analysts also warn that R&SA will still need cash just to continue funding the life business.

Cazalet Financial Consulting principal Ned Cazalet says: “The embedded value of the life business has now fallen by millions. Far from being a source of capital, the life business actually needs capital injected just to keep it afloat.”

R&SA spokesman Steve Clark says: “We will be updating the market on how we intend to fund growth in general insurance, where we have identified an upturn.”


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