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CORRESP
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Prepared and filed by St Ives Financial

 Mr. Jim B. Rosenberg

Senior Assistant Chief Accountant

Division of Corporation Finance

United States Securities and Exchange Commission

Washington, DC 2054

U.S.A.

December 19, 2005

    Re:
    Royal & Sun Alliance
          Insurance Group plc

Form 20-F for the fiscal year Ended December
31, 2004

File Number: 001-15146

Dear Mr. Rosenberg:

Thank you for your letter to our Chief Executive Officer, Andrew Haste, dated November 28, 2005, relating to your review of our Annual Report on Form 20-F for the fiscal year ended December 31, 2004 (the “Form 20-F”) and our responses of October 20, 2005 to your comment letter of September 22, 2005. As Chief Financial Officer of Royal & Sun Alliance Group plc (“Royal & Sun Alliance”), I will respond on Royal & Sun Alliance’s behalf.

As requested in your letter, the numbered paragraphs below correspond with the numbered comments set forth in your letter. For your convenience, we have reproduced each of the comments from your letter (in italics) immediately before our response. We will also ensure that this letter of response is filed on EDGAR under the form label CORRESP.

It is important to note that for our 2005 Form 20-F we will be transitioning from U.K. GAAP to International Financial Reporting Standards (“IFRS”). The introduction of IFRS will cause us to significantly amend a number of the disclosures in the Form 20-F. We therefore propose that where, in the following paragraphs, we have presented   additional background information in a disclosure-type format, the additional disclosures be made as part of the 2005 Form 20-F along with the IFRS changes.

Form 20-F for the Fiscal year Ended December 31, 2004

Item 5. Operating and Financial Review and Prospects

Liquidity and Capital Resources, page 97

1.    Please refer to prior comment
      one. The restructuring of the US operations and sale of the life operations
      appears to have significantly reduced cash flow and eliminated important
      sources of future liquidity. While you propose some forward-looking disclosures
      such as reorganization costs expected to be incurred and expected annual
      savings and associated costs, the majority of your discussion appears to
      be historical in nature. Please tell us in a disclosure-type format the
      expected impact of your reorganization and restructuring programs on your
      future operating results and liquidity and capital resources. Include a
      comprehensive forward-looking discussion of related known trends, demands,
      commitments and uncertainties. Refer to Financial Reporting Codification
    Section 501.02.

Response:

In September 2003, following a number of years of operating losses, we announced plans to restructure our US business including the sale of renewal rights to Travelers. In 2003 our US Operation had a net cash outflow from operating activities of £291m. Our US Operation continued to be loss making during 2004 and recorded an operating loss of £274m. Accordingly, our US Operation has not been a source of liquidity in recent years, having recorded operating losses for 2001 and each subsequent year. In future years we believe cash flow will be broadly neutral as investments are liquidated to settle outstanding claims on the US business.

Net cash flows accruing to the shareholders from the profits of our life insurance businesses in the United Kingdom and Denmark was £160m in 2003. In 2004 our discontinued Life businesses contributed £409m out of our net shareholder cash inflow from operating activities of £697m. The £409m of net cash inflow included a one-time amount of £320m related to repayment of a loan made by the shareholders to our UK Life business, with the balance of £89m representing operating cash flows accruing to the shareholders principally arising from life insurance business profits for the nine month period until disposal.

Proceeds from the disposal in 2004 of our Life insurance businesses in the United Kingdom and Denmark as set out in note 25 on page F-50 were £1,065m. These proceeds have been retained within our property and casualty business and we anticipate that in future periods the resulting investment return will compensate for the loss of the operating cash flows previously arising from our life insurance business profits. Accordingly, in broad terms, we believe the disposal of the life businesses will be cash flow neutral from a shareholder perspective.

We do not believe that the restructuring of our US Operations and sale of our life insurance businesses has eliminated an important source of future liquidity and cash flows.  Accordingly, we did not deem it appropriate to make any further comment on the impact on our future liquidity and capital resources and therefore would not propose to make any changes to the Form 20-F.

Critical Accounting Policies,
page 103

2     Please refer to prior comment
      three. You state that you do not derive statistical loss distributions
      or confidence levels around reserving estimates. However, you also state
      that in selecting the best reserve estimate, you consider the appropriateness
      of each method to the individual circumstances of the reserve class and
      underwriting year and consider key “variability factors” such
      as trends in loss severity, general economic conditions, future loss cost
      inflation and judicial trends. Please tell us in a disclosure-type format
      how the individual circumstances of each reserve class and accident year
      warrant use of different reserve methods. We are particularly interested
      in the degree of conservatism inherent in these different reserve methods
      and how often and under what circumstances the reserve method is changed
      for a reserve class and underwriting year. Also, describe how you judgementally
      adjust the reserve projection for “variability factors” in
      developing your best reserve estimate. Quantify the impact of these “variability
      factors” adjustments on your reserve projections for each year presented.
      Link this discussion with your explanation of changes in prior year reserve
    estimates.

Response:

In our previous response we outlined the methodology we adopted in estimating our loss reserves:

“The Company’s estimates of losses and loss expenses are reached after a review of several commonly accepted actuarial projection methodologies.  In selecting its best estimate, the Company considers the appropriateness of each method to the individual circumstances of the reserve class and underwriting year.  The projections given by various methods include (but are not limited to) incurred development methodologies, paid development methods, paid Borhuetter Ferguson methods, incurred Borhuetter Ferguson methods and loss ratio methods.  This process is designed to select the most appropriate best estimate.  The Company does not derive statistical loss distributions or confidence levels around its reserving estimates and as a result
do not have reserve range estimates to disclose.”

The following is indicative of the disclosures we propose for our 2005 Form 20-F.    The following section would replace the wording currently on page 103 of our 2004 20-F in the Technical Provisions section from paragraph 3 (ie we retain existing wording for UPR and life (as amended for 2005).

Property & Casualty (taken from pages 40/41 of 2004 Form 20-F)

We establish property and casualty loss reserves to account for the anticipated ultimate costs of all losses and related loss adjustment expenses (‘‘LAE’’) on losses that have already occurred. We establish reserves for reported losses and LAE, as well as for incurred but not yet reported (‘‘IBNR’’) losses and LAE. Loss reserve estimates are based on known facts and on interpretation of circumstances including our experience with similar cases and historical claims payment trends. We also consider the development of loss payment trends, levels of unpaid claims, judicial decisions and economic conditions.

We use a variety of statistical techniques and a number of different bases to set reserves, depending on the business unit and line of business in question. Our reserving managers consider claims developments separately for each line of business and subdivide certain lines of business by major claim types or subclassifications of business. Large claims impacting each relevant account are also generally assessed separately, either being reserved at the face value of the loss adjusters’ estimates or projected separately in order to allow for the future development of large claims.

Reserves are calculated gross of any reinsurance recovery, with a separate asset recorded for the reinsurer’s share having due regard to collectability.

Claims provisions relating to long term permanent disability claims in the United States and Scandinavia are included after reflecting interest expected to be earned. In addition, claims are similarly discounted where there is a particularly long period from incident to claims settlement and where there exists a suitable claims payment pattern from which to calculate the discount. In defining those claims with a long period from incident to claims settlement, those categories of claims where the average period of settlement is six years or more from the balance sheet date has been used as a guide. The total discount applied to these reserves was £721 million in 2004 and £662 million in 2003. The income statement impact of this
discounting was a £156 million credit in 2004 and a £133 million credit in 2003. Other than with respect to the above reserves, we do not record reserves on a discounted basis.

We analyse claims progressions according to calendar year accident periods, underwriting years and notification years, with allowances for pure IBNR claims affected in the last instance by way of analyses of claims notification delay tables.

The process of estimating loss reserves is subject to a number of internal and external variables such as changes in claims handling procedures, inflation, judicial trends and legislative changes. Many of these items involve considerable uncertainty. Additionally, there may be significant reporting lags between the occurrence of the insured event and the time it is actually reported to us. We continually refine reserve estimates in a regular ongoing process as experience develops and further losses are reported and settled. We reflect adjustments to reserves in the results of the periods in which we make such adjustments. In establishing reserves, we take into account estimated recoveries for salvage and subrogation.

We derive reserves for reported losses and LAE from estimates of future payments that will be made in respect of reported losses, including settlement costs, having regard to our particular experience with the type of risk involved.

Local regulation in some countries also requires the establishment of catastrophe equalization reserves.  Such reserves defer a portion of income with respect to a line of business to future periods in which catastrophe losses might occur (as a result of such factors as hail, nuclear incidents, storms, floods and pollution) in that line of business. Catastrophe equalization reserves are required under U.K. statutory requirements to be presented under the heading ‘‘Technical Provisions’’ in our consolidated balance sheet. Catastrophe equalization reserves are not included in the loss development tables and the reconciliation of reserves for losses and LAE presented within “Item 4 – Information on the Company
– Property and Casualty Reserves”.

From time to time we supplement our claims and underwriting processes by utilizing third party adjusters, appraisers, engineers, inspectors, other professionals and information sources to assess and settle catastrophe and non-catastrophe related claims.

Because the establishment of loss reserves is an inherently uncertain process, there can be no assurance that ultimate losses and LAE will not exceed existing loss reserves. Actual losses and LAE may deviate, perhaps substantially, from estimates of reserves reflected in our consolidated financial statements.

We believe based on the information currently available to us that, overall, our loss reserves as of December 31, 2005 were appropriate.

The following table shows loss and loss adjustment expense reserves by region as of December 31, 2005, net of reinsurance:

Personal

Commercial

Total

£’m

£’m

£’m

U.K.

X

X

X

U.S.

X

X

X

Scandinavia

X

X

X

International

X

X

X

Total

X

X

X

Reserving for non-Asbestos reserves:

How non-Asbestos reserves are set

We analyse reserves by line of business within the various regions. A single line of business may be written in one or more of the regions. Case reserves are established on each individual claim and are adjusted as new information becomes known during the course of handling the claim. Lines of business for which claims data (e.g. paid claims and case reserves) emerge over a long period of time are referred to as long-tail lines of business. Lines of business for which claims data emerge more quickly are referred to as short-tail lines of business. Within the Group’s operations a typical short-tail line of business is property. The longest tail lines of business include personal accident in Scandinavia, workers’ compensation in USA,
commercial liability, and professional liability.

Our reserving managers regularly review reserves for both current and prior accident years using the most current claim data. These reserve reviews incorporate a variety of actuarial methods and judgments and involve extensive analysis. For most lines of business, a variety of actuarial methods are reviewed and the reserving managers select methods and specific assumptions appropriate for each line of business based on the current circumstances affecting that line of business. These selections incorporate input from claims personnel, underwriters and operating management on reported claims trends and other factors that could affect the reserve estimates.

For short-tail lines of business, development of paid claims and case reserves is reliable and indicative of ultimate losses. The method used is based on the amount of paid and case estimates for reported claims.

For long-tail lines of business, initial development of paid claims and case reserves is less reliable and, accordingly, may not be fully indicative of ultimate losses. For this reason, within these lines, methods which incorporate a development pattern assumption are given less weight in calculating the reserves for the early stages of loss development. The estimation of reserves for these lines of business in the early stages of claims development is therefore largely influenced by prior accident years’ loss ratios and changes to pricing, claimscosts, mix of business, ceded reinsurance andother factors that are expected to affect the loss ratio. For later periods of loss emergence, methods which incorporate a development
pattern assumption are given more weight in estimating ultimate losses.

Based on the results of the reserve reviews and after consideration of other factors such as the maturity of the accident year, trends observed over the recent past and the level of volatility within a particular line of business, we determine the appropriate level of reserves to book.

[In our 2005 Form 20-F we will include a section on main developments in 2005]

Current trends contributing to reserve uncertainty

We are a multi-line multi-national property and casualty insurer. We are therefore subject to reserve uncertainty stemming from a number of conditions, including but not limited to those noted above, any of which could be material at any point in time for any line of business. Certain issues may become more o