RSA announced this morning it has signed contracts to dispose of £834m of UK legacy insurance liabilities to Enstar Group.
The FTSE 100-listed insurer said the transaction "initially takes the form of a reinsurance agreement", effective from 31 December 2016.
The group also said the deal was a boon to its capital position and added up to 20 points of Solvency II coverage.
Shares in RSA went up 2.56 per cent at the open.
"We are pleased to have achieved this valuable risk clean-up transaction with Enstar," said RSA boss Stephen Hester.
"It allows us to focus even more on driving the outperformance of RSA's continuing businesses. Earnings accretion, risk reduction and capital improvement are a happy combination to report.
"As previously indicated, we expect to deploy the capital resources released to benefit earnings and capital quality through additional debt retirement in 2017."
Analyst Barrie Cornes at Panmure Gordon said the deal was good news for shareholders "as it removes a book of 'nasties' and has a positive impact on financials".
"We expect the additional capital released to be used to pay down expensive debt thus increasing earnings per share in the future and [thus] improving the dividend story," he added.
RSA was also the subject of a proposed takeover by Zurich in 2015, although the deal fell apart after the Swiss group's balance sheet was dented by a tough year of trading.