Royal & Sun Alliance Group cut 1,000 jobs in the UK yesterday and asked shareholders for £960 million sterling (€1.39 billion) to cover asbestos and other claims.
On the release of its interim results, Royal & Sun announced a rights issue, saying it would offer one new share at 70 pence for every existing share held, less than half of the previous day's closing price.
Shares in the insurer fell by 13 per cent as brokers expressed concern that the new money would pay for past problems rather than fund growth.
The money will help fund an increase in provisions of up to £800 million (€1.16 billion) in the third quarter.
About £150 million of this is needed to cover a reserves deficit for asbestos and environmental risk claims in the US and Britain.
The group's first-half operating profits rose to £351 million from £301 million a year earlier.
Royal & Sun Alliance Group's new chief executive, Mr Andy Haste, said the company was selling businesses to reduce risk and would focus on general insurance in the UK, Scandinavia and Canada.
However, Royal & Sun's Irish operations were also identified as having potential for future growth.
A statement from Royal & Sun Alliance Ireland, which employs 650 people here, said it had delivered a "solid" performance over the first six months of 2003.
This reflected a more positive trading environment bolstered by the absence of severe weather conditions, according to the company.
- (Additional reporting, Reuters)
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