INSURANCE group Royal & SunAlliance is to return £750 million to shareholders through a special dividend of 48p per share, the company announced.

The UK's largest general insurer, which is partly based in Sussex, also increased its basic dividend for 1998 to 23.0p from 21.0p.

RSA said the £750 million, which represents around ten per cent of its market value, would come from cash reserves.

Bob Mendelsohn, chief executive of the group, which slashed nearly 300 jobs at its centres in Horsham and Brighton in November last year, said: "We have more capital than we currently need."

Some analyst have put the group's capital surplus at £2.5 billion.

The payback came as the group announced a fall in operating profit in the year to December 31 to £602 million. This compared with £988 million operating profit the previous year.

The group was badly hit by bad weather claims during the last 12 months, it said.

Mr Mendelsohn said: "Results for the full year 1988 are somewhat better than consensus forecasts, which were reduced following our announcement at the nine months of the unusual level of weather related losses.

"I am unhappy about the decline in pre-tax operating income, and our employees around the world are working with a sense of urgency to improve results this year."

In February the company failed in its bid to take over Guardian Royal Exchange and today said it had disposed of its U.S. life arm, Swiss Re, for £240 million.

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