Only a portion of the £450m perpetual subordinated notes announced by Royal & SunAlliance (R&SA) will be treated as hybrid capital, said ratings agency AM Best.
Approximately £200m will be treated as hybrid capital in accordance with AM Best's Debt Rating Methodology, subject to an aggregate equity credit limit for hybrid equities of 20% of total adjusted capital.
Part of the proceeds will be used to repay an existing subordinated loan, it said.
AM Best has assigned an indicative rating of “bbb” to this forthcoming issue of R&SA, guaranteed by R&SA Insurance.
The outlook is negative, in line with R&SA's financial strength rating, currently rated A- (excellent) with a negative outlook.
