The Swiss insurer announced in July that it was considering buying its British counterpart for £5.6bn.
RSA said
that the approach had been unsolicited but that Zurich's decision not
to proceed had not been a result of anything unexpected in the due
diligence process.
Zurich warned profits in its general insurance arm would miss forecasts.
"Given
the deterioration in profitability in certain parts of the General
Insurance business, and following his appointment as General Insurance
CEO, Kristof Terryn is conducting an in-depth review of the business,"
Zurich said in an update on third quarter trading.
It estimated
that it would lose about $275m (£177m) as a result of the explosions at a
container storage station in the Port of Tianjin in China in
mid-August.
Overall, it expects an operating loss of about $200m from the general insurance business.
RSA shares fell 22% in early trading as some banks and investment houses advised clients to be less enthusiastic about the stock.
The
falls came despite the company announcing that its trading results for
July and August had been "positive and ahead of our expectations".
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