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R&SA spends £464m to keep WP fund afloat

Royal & Sun Alliance ploughed a total of £464m into its £10bn Sun Alliance & London closed with-profits fund last year in a bid to keep it solvent.

The fund, which has more than £1bn put aside for guaranteed annuity liabilities, was handed £224m in what R&SA describes as a “notional adjustment” of shareholders&#39 funds between its life and non-life businesses.

The fund was also given a contingent loan of £240m by R&SA in the fourth quarter of 2001 after stockmarket falls caused it to require further support. Neither the capital adjustment nor the loan were declared in R&SA&#39s annual results last month.

Communications director Malcolm Gilbert admits the capital injections reflect weaknesses in the fund but says R&SA is under no obligation to include them in its preliminary reports.

However, analysts say the sums involved should have persuaded R&SA&#39s management – which is looking for a buyer for its life and pensions and asset management arms – to inform shareholders.

Cazalet Financial Consulting principal Ned Cazalet says: “R&SA&#39s management has failed to inform shareholders it has put the money into Sun Alliance & London despite the fact that we are talking about a lot more than £1m or £2m. It is all a bit grizzly.”

Gilbert says: “We allocate shareholders&#39 funds depending on a host of factors and we provided the loan to give the fund support when market values fell. We do not have to include these in the reports.”

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