Royal & SunAlliance USA Takes Steps To Boost Investment

Royal & SunAlliance USA has announced the decision by its parent company, Royal & Sun Alliance Insurance Group PLC, to issue American Depositary Receipts–or ADRs–as a way to make investment in the British-based insurer easier for U.S. investors. The ADRs will be traded in the over-the-counter (OTC) market and are now available. Each ADR represents five ordinary shares of Royal & Sun Alliance Insurance Group PLC stock. The price of one ordinary share at the close of the London Stock Exchange on Monday, September 21, 1998, was 4.69 pounds ($7.90 US dollars).

"Today's financial investment markets are global, and corporations are looking beyond the borders of their home countries to raise capital, expand their shareholder base, and cultivate new awareness of their name, products and services," said Royal & SunAlliance USA president Terry Broderick. "By issuing ADRs, the corporation will be positioned to accomplish each of those goals." Broderick also said ADRs are key to the company's growth strategy and an important part of its objective to achieve industry leadership. "We will grow in two ways," he said. "Organically–through a balanced business portfolio and building capabilities in select markets–and through mergers and acquisitions, a step that's prerequisite to industry leadership."

American Depositary Receipts are negotiable certificates that represent ownership of a designated number of shares of securities in non-U.S. companies. A depositary bank, selected by the issuing company, issues the ADRs and provides all stock-transfer and agency services in connection with the ADR program. The Royal & SunAlliance depositary is Citibank, N.A.

Experts say ADRs provide investors and issuers with important advantages. Because they are quoted and traded in U.S. dollars in the American securities markets, ADRs facilitate the purchase, holding or sale of non-U.S. securities by American investors. They also pay dividends in U.S. currency, making currency conversion unnecessary. And ADRs can make stock transfer a negotiable alternative to an all-cash transaction in corporate merger & acquisition activity.

"The U.S. is the largest and most liquid securities market in the world," said Broderick. "By issuing ADRs, Royal & SunAlliance opens the way for American investors to diversify their portfolios and for the company to position itself securely for any acquisition opportunities that arise for us."