INTERNATIONAL debt rating agency Moodys has confirmed its ratings of the Sun Alliance Group and has placed its ratings of Royal Insurance Holdings and subsidiaries under review for upgrade. The ratings actions follow the recent announcement that the two groups are to merge. If the plan is approved by the relevant authorities the merger would create the largest composite insurer in Britain.

The geographic diversity of the two groups could result in a much broader base of earnings and cash flows and make group operating results less susceptible to severe underwriting losses as a result of catastrophes, according to Moodys. The agency said its review will focus on the corporate structure, financial and operating leverage and operational cost savings opportunities.