RSA lifts reserves to face US claims

ROYAL & SunAlliance has boosted its reserves against potential US claims by another £160m, in a move that uses up the last of the cash raised in its rights issue 18 months ago.

The general insurer, which has closed almost all of its US arm to new business under new chief executive Andy Haste, said the bulk of the provision was to cover workers' compensation policies.

The move came within minutes of Swiss giant Zurich Financial Services bolstering its own reserves by a further $1bn (£530m), reflecting an increasing trend across the insurance industry as a whole.

Insurers such as RSA, Zurich and Munich Re face rising claims from asbestosis, workers' compensation and increased medical care costs as legacy issues begin to surface, particularly in the US.

Roman Cizdyn, analyst at Oriel Securities, put the reserves issue down to the 'the grind of the legal system'.

RSA warned four months ago that it may face bigger-than-expected claims in the US.

Zurich revealed its reserves strengthening in annual results, showing that underlying profits rose 29% last year to $2.6bn.