RSA sells offshore life business

ROYAL & SunAlliance today sought some much-needed breathing space from regulators and shareholders by unveiling the sale of its offshore life assurance business to Friends Provident for £133m.

The deal means the troubled insurer is just over half way to achieving its goal of raising £800m from asset sales, having sold its asset management arm to Friends Ivory & Sime for £240m last month.

But today's sale will do little to quell speculation that RSA is about to launch a huge rights issue to fund further growth and relieve pressure on its stretched balance sheet. It is also unlikely to cool the intense conjecture surrounding its talks with the Financial Services Authority over a range of issues, particularly the potential liabilities stemming from its with-profits funds.

It is believed these negotiations could result in RSA, led by Bob Mendelsohn, being forced to increase its £1.18bn provision for liabilities associated with its guaranteed annuity rate policies. This is despite the insurer insisting that this amount was sufficient to meet its legal obligations.

RSA has also already admitted it will be fined by the FSA for a second time over the handling of its pensions mis-selling review. Royal & SunAlliance shares have plunged from 535p a year ago to 271 1/2p, up 4p today. This has come amid hard times in the general insurance operations and poor stock market returns.