Zurich Insurance was set to make one of the biggest takeovers in the history of insurance companies, but has had to bail on the deal after the explosions in Tianjin in August weakened its financial strength.
The £5.6 billion takeover would have been the largest in the sector for 15 years, but RSA confirmed in a stock market statement that the deal was off.
The fact that the deal had been called off reduced the share prices by 21 per cent, leaving them at 403.3 pence.
Zurich had reportedly declared that RSA was a viable company to buy out and the deal was set to go ahead, until the tragedy struck in Tianjin.
In the run up to the third quarter trading update, Zurich reviewed and catalogued a list of problems, and said it expected to suffer a $200 million (£129 million) operating loss in the third quarter.
The disaster in China, which saw over 100 people killed and many more injured, cost Zurich at least $275 million, and that, coupled with a reported $300 million shortfall in liabilities in regard to the American motor industry have left Zurich in an uncertain place financially.
The issue with the deal not going ahead is that it was hoped to bring a spark back to the British insurance sector, and trigger a chain reaction of deals which could have helped get the market moving more.