Nov. 10 (Bloomberg) -- Royal & Sun Alliance Insurance Group Plc, Britain's second-largest non-life insurer, posted a third quarter profit after the company completed a series of asset sales and retreated from the U.S.

Chief Executive Andy Haste, 43, is seeking to reverse five annual losses from asbestos claims, investments and U.S. workers' compensation payments. Royal & Sun has sold assets and pulled back from its unprofitable U.S. business to focus on the U.K., Canada and Scandinavia. The strategy also helped prevent more severe U.S. hurricane losses, which have undermined profits at many insurers.

Net written premiums rose to 1.27 billion pounds in the third quarter, from 1.22 billion pounds. The operating result, or operating profit including forecast investment returns, rose to 159 million pounds from 57 million pounds. That beat the 153 million- pound median estimate of five analysts surveyed by Bloomberg.

``There were no big surprises and they have continued the positive momentum of the first half,'' Richard Gradidge, an analyst at Numis Securities Ltd. in London, said in a telephone interview. ``There is a sigh of relief'' when there are no negative developments from the U.S., he added.

Shares of Royal & Sun rose 1.5 pence, or 1.4 percent, to 106.25 pence at 11:25 a.m. in London, valuing the company at 3.1 billion pounds. The stock has gained 35 percent this year through yesterday, making it the sixth-best performer in the 19-member FTSE ASX Insurance Index this year, which has advanced 26 percent.

In addition to cutting U.S. losses, the insurer profited from underwriting and investments. Royal & Sun also reduced its pension deficit by 126 million pounds in July as British employees agreed to change their retirement plans.

The insurer last month sold its non-standard auto unit to Sentry Insurance Group for about $200 million, its last U.S. operation that was still accepting new customers.

Royal & Sun expects to complete cutting its U.S. presence to two states from 11 by the first quarter of 2006, Haste said on a conference call. The company has reduced its U.S. workforce to about 1,000 people, from 6,000 in 2003, Haste said.

Royal & Sun cut its forecast of losses related to Hurricane Katrina to 14 million pounds, from 25 million pounds. Claims from Hurricane Wilma will probably cost about 10 million pounds. The U.S. pullback helped it avoid heavier storm losses, Haste said.

The company's combined ratio, or claims and expenses as a percentage of premiums, fell to 96.7 percent in the first nine months of 2005, from 101.9 percent in the year-earlier period, indicating a return to profitable underwriting.

Haste said the company hasn't yet felt a ``ripple effect'' on insurance rates from U.S. hurricanes. Premium prices have recently increased for coverage of certain U.S. risks that were affected by the storms such as oil rigs and property. Commercial insurance prices in Britain fell 5 percent in the first nine months, while personal car premiums had ``low digit'' gains, the company said.

Royal & Sun last year pulled out of life insurance with the sale of its U.K. business to Resolution Life Group Ltd. for 850 million pounds. It also sold the life business of its Codan A/S unit in Scandinavia to SEB AB, for about 2.7 billion Danish kroner ($440 million).

Royal & Sun said earlier this year that it has completed the bulk of its asset sales. Last month, it agreed to buy Compania de Seguros Generales Cruz del Sur SA for $119 million to become Chile's biggest non-life insurer. Royal & Sun may consider other ``bolt-on'' acquisitions, Haste said today.

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