Management at Bermuda-based run-off specialist Castlewood Holdings Limited yesterday would not confirm or deny rumours that the company is about to purchase the US operations of UK insurer Royal & Sun Alliance (RSA).

A report earlier this week in UK trade publication Insurance Day claimed RSA and Castlewood were close to confirming a deal for all or part of Royal & Sun Alliance USA, which is reportedly closed to new business.

Castlewood Holdings specialises in managing the run-off of property and casualty insurance companies.

When contacted by yesterday Paul O?Shea, chief operating officer of Castlewood would not comment on the rumoured sale.

?Castlewood is not in a position to make any comment on that,? he said.

Early last month RSA announced it would be setting aside an additional ?160 million to strengthen its US reserves. The company was forced to take this action in anticipation of additional potential claims in certain business lines that would impact the US operation, primarily related to workers compensation insurance.

RSA had announced plans to restructure the US business back in September, 2003 with the expressed intention of reducing its US exposures and stabilising the subsidiary. When announcing the additional boost to the US reserves in February the company said group performance outside of that country had remained strong.

There has been speculation in London this week that RSA could confirm the rumoured deal with Castlewood Holdings next week when the company announces its full-year results.