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Royal & Sun to cut 1,700 jobs
LONDON, England -- Royal & Sun Alliance, Britain's second biggest insurer, said on Thursday it would axe 1,700 jobs and sell assets to bolster its finances. The insurer needs to raise £3.6 billion ($5.6 billion) to meet asbestos and flood claims. Like its rivals, it has seen its ability to pay claims undermined by slumping stock markets. Insurers typically hold vast amount of money in stocks. It aims to cut 900 jobs in Britain and 800 in the United States. The company also announced plans to sell its U.S. insurance business RSUI and float the majority of its Asian-Pacific operations. It ruled out plans to sell shares to meet claims. Chief Executive Bob Mendelsohn was ousted in September after a dismal spell of results. The company has conducted a review of its business and is expected to ask shareholders for additional funds. But it is still without a chief executive and other European insurers have beaten Royal & Sun (RSA) to ask the market for more money. "The feedback from institutions has been upfront, and I don't believe they wanted a rights issue,'' Nicola Barber, director of UK equities at Rothschild Asset Management, told Reuters. Royal & Sun said on Thursday it would continue to focus on general insurance, where premiums have been rising, and that its revamped business would need £3.6 billion of capital. "It will deliver a leaner, more focused business, able to deliver attractive returns to investors consistently across the insurance cycle,'' Chairman Patrick Gillam said in a statement. Royal & Sun hopes to announce a replacement for Mendelsohn in the near term, the company said. It reported operating profits of £471 million for the nine months to the end of September, up from a restated profit of £307 million a year ago. The latest result was broadly in line with market forecasts, according to Reuters. Its stock, which has fallen more 70 percent this year, rose 2.5 percent to 120.75 pence in early London trading on Thursday.
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