Following much market speculation, struggling UK insurer Royal and Sun Alliance has announced that it will make a rights issue to boost its reserves.

RSA will offer investors a “one for one” share issue which it hopes will raise around $2.3 billion of capital. Whether investors will respond accordingly remains to be seen, but the word from observers is not too positive despite the group recording a half-year profit of $345 million compared with its $673.5 million loss at the same time last year.