Insurer seeks to avoid rating downgrade

RSA is considering scrapping its dividend as part of a plan to raise at least £500m ($826.95m) to plug a hole in its balance sheet.

Last year RSA paid out nearly £300m in dividends, according to the UK newspaper The Sunday Times. But it is now thought it could pass on its final dividend all together, and lower payouts in the future, as it looks to raise capital to avoid a ratings downgrade.

Ratings agency Fitch has warned it will downgrade RSA from its A rating if it does not raise its capital surplus, while Standard & Poor’s has warned of a double-notch downgrade if it thinks management action to strengthen capital and profitability is inadequate.

Reports have also claimed RSA is close to appointing advisers to sell its businesses in central and Eastern Europe.

On a call with investors last month, executive chairman Martin Scicluna said RSA had not been approached to sell its entire business, but then declined to comment on whether the group had been approached to sell off parts of the company.

RSA declined to comment to GR’s sister title Insurance Times. The insurer has previously said it will update investors on its business review at the end of February.