Insurance giant Royal and Sun Alliance today announced it is to cut 200 jobs at its offices in Horsham.

About 1,700 RSA workers are based in the town. Those affected work in the company's UK Life and Pensions operation.

The department employs about 2,500 workers across the UK and 1,300 jobs are to be lost in total in the next 18 months.

Chief executive Bob Mendelsohn said: "This has been a difficult decision that will affect many colleagues but we believe it is the right one that is in the best interests of the group and the UK company as a whole."

"The group has been in talks with unions on the number and timing of cuts."

The company said affected employees would where possible be offered other opportunities within the group.

Today's news is the second major blow for RSA staff in Sussex in four years.

In 1998 almost 300 jobs were lost when the company closed its customer service centres in Brighton and Horsham.

In July 2000 unions were worried that up to 250 jobs could be lost after the company announced it was planning to contract out some posts to India to keep the company competitive.

Today's announcement of the restructuring follows a review of the life business as RSA moves to concentrate on general rather than life insurance.

During the past three years it rationalised the life business by stopping the sale of endowment policies, closing its with-profits funds to new business, selling its investment management company and selling its group risk businesses.

It said today its remaining UK unit-linked and Phoenix funds would close to new business.

R&SA said the restructuring of the life operations would release a further £350 million for use in its general insurance business - which when added to proceeds from selling businesses would bring it close to its target of £800 million.

The group said at the beginning of the year it planned to release £800 million of capital to use in its general insurance business which led to speculation it would launch a rights issue to raise the cash.

Today it said the actions brought it near its target with £725 million raised.

Mr Mendelsohn said: "There has been a lot of speculation we would do a rights issue because we would fail to reach the £800 million but I think today's announcement will put paid to that.

"To fund growth in the general insurance business, the group intends to raise further capital."

Mr Mendelsohn said he would not rule out a rights issue to do this, although there were other options.

The update came as R&SA said it was taking a further £66 million hit relating to claims from the September 11 terrorist attack on the World Trade Centre.

That meant operating profit for the six months to June 30 slid to £301 million from £366 million previously.

Bottom-line pre-tax losses, when including the impact of lower stock markets and one-off costs, were £319 million against £423 million.