Delaware commissioner makes right call on RSA.(Opinions)(Royal & Sun Alliance USA Inc.)(Brief article)

Business Insurance, February, 2007

THE DELAWARE INSURANCE Commissioner appears to have made the best of a bad job with his conditional approval of the sale of Royal & Sun Alliance USA Inc. to a group of the defunct insurer's former managers. Although the process whereby insurers ring-fence liabilities and walk away seems to have become an accepted and legal practice, we share the skepticism of several large policyholders about the adequacy of the funding of the runoff insurer.

By some estimates, the various long-tail liability claims will exceed RSA USA's surplus to the extent that even if the claims are only partially successful, the insurer would have great difficulty meeting its obligations. Policyholders that paid for coverage from RSA USA might feel better about the deal if the insurer's...

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