Royal & SunAlliance will float its Australian and Asia-Pacific regional operations next year. The troubled British insurer, which has been widely expected to sell its Australian and NZ assets, has opted for an initial public offering involving most of its Asia-Pacific operations, keeping them intact.

Mike Wilkins, the MD of R&SA Australia, will become CEO of the new regional company, and Group Director Asia-Pacific Ewoud Kulk will become non-executive Chairman.

Macquarie Bank and Goldman Sachs have been retained.

Apart from its Australia and NZ operations, R&SA also writes commercial and personal insurance business in Japan, China, Hong Kong, Singapore, India, Pakistan, Korea, the Philippines, Malaysia, Indonesia and Thailand. It is the largest composite insurer in the NZ market and is acknowledged as holding some of the best-performing insurance brands in Australia.

Its approximate combined revenue base, according to R&SA, is $4 billion.

Until the IPO is finalised during the first half of 2003, it will be “business as usual”, according to senior R&SA sources.  

The IPO is hoped by the British parent to give it as much as $2 billion as it struggles to recover from bad results and low investment returns. Yesterday R&SA said it will cut 1700 jobs in its British and US operations to further reduce costs.

Analysts may have been generally positive about the move, but ratings agency Standard & Poor’s didn’t come to the party. It lowered the British parent’s ratings to A- from A, and imposed the same measure on the Australian and New Zealand general insurance operations. S&P’s Director Michael Vine said this morning the rating action “is because the ultimate success of the listing will not be known for at least six months, and clarification is required as to the financial strength of a number of unrated Asian general insurance and Australasian life operations that will form part of the IPO”.