R&SA to Sell Puerto Rico Subsidiary

The U.K.’s Royal & Sun Alliance Insurance Group announced that it has agreed to sell its Puerto Rican subsidiary, Royal & Sun Alliance Insurance (Puerto Rico), Inc., to Cooperativa de Seguros Multiples de Puerto Rico for around £38 million ($61 million).

The deal was announced yesterday, and follows R&SA’s decision to sell Royal & SunAlliance Underwriters, its U.S. surplus lines division, to Alleghany Corp. (See IJ Website June 9 and article in today’s “Southeast” section).

As of December 31, 2002 Royal & Sun Alliance Insurance (Puerto Rico) Inc.’s Gross Written Premiums were £87 million ($141million).
Cooperativa will pay cash for the acquisition. The exact amount is subject to a completion accounting adjustment. R&SA said that as of December 31, 2002 the net asset value of its Puerto Rico subsidiary, “on a local GAAP basis,” was approximately £28 million ($45 million). It owns approximately 94.3% of the company’s shares.

“This represents another significant step in Royal & Sun Alliance’s strategic withdrawal from the hurricane-exposed territories of the Caribbean. It follows a withdrawal from the Bahamas and Bermuda at the end of 2002 thus significantly reducing potential volatility in results. It will also contribute further to the Group’s capital release programme,” stated Kelvin Edwards, Managing Director, Latin America & Caribbean Region.

The announcement noted that, “the business is to be sold as a going concern,” and [the transaction] is subject to “certain conditions including normal regulatory approvals.” It also indicated that the “Latin America & Caribbean regional reinsurance programme of Royal & SunAlliance will remain in place until 31 December 2003 and will continue to respond to liabilities incurred by Royal & Sun Alliance (Puerto Rico) Inc. up to that date with limited run off cover provided on a small number of policies in 2004.”