Royal & SunAlliance (R&SA) has added £500m to its claims reserves as part of yesterday's announcement of its third quarter results.
The company had previously indicated that £800m raised by the recent rights issue would be needed for claims reserving, particularly for workers compensation claims arising in the US.
R&SA said the remaining £300m had been placed in a contingency fund, on the advice of its accountants.
"The money is being held at a group level against potential claims developments," said Richard Emmott, R&SA's group communications director. The money will not be available for underwriting.
The UK personal lines business was hit by a rapid rise for subsidence claims this year following the unusually hot weather this summer. R&SA estimated that claims on household policies from subsidence would reach £120m, compared with the £50m it expects following an average summer.
R&SA said the combined ratio for the UK personal lines business was 101.3%. For the same period in 2002, the combined ration was 109.1%.
