A.M. Best Notes Royal & Sun Alliance Group Ratings Remain Unchanged

March 6, 2003

A.M. Best Co. has commented that the financial strength rating of A- (Excellent) of The Royal & Sun Alliance Insurance Group plc (R&SA), United Kingdom and the “bbb” and “bbb-” ratings of its subordinated debt and preferred stock remain unchanged following the company’s announcement of the 2002 year-end results. The outlook remains stable.

As expected, 2002 year-end results reflect the company’s improving operating performance while maintaining an excellent business position in its key markets. R&SA continues to execute its risk reduction programme, ceasing to write certain lines of business and further divesting and closing non-core operations.

The sale of Royal Specialty Underwriting Inc. (RSUI) and the IPO of the Australian and New Zealand operations – significant sources of capital release – are likely to be completed before June 2003. The decline in net premium will lead to a reduction in risk capital requirements, enabling R&SA to focus on growing its priority lines in the United Kingdom and the United States.

After discussions with R&SA, A.M. Best believes that the estimated deficit on the company’s own pension fund is unlikely to negatively affect the rating. Although the company’s defined pension benefit scheme is now closed, A.M. Best will continue to monitor any potential deterioration.

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