The U.K.’s Royal & SunAlliance took another step toward exiting the life insurance business with today’s announcement that it has agreed to sell the life and pension operations of Codan, its 71.7 percent Danish subsidiary, to SEB Trygg Liv, “subject to normal regulatory and other conditions.”
R&SA said its share of the consideration will be approximately £173 million (DKK1.936 billion – $318 million), “payable in cash to Codan, subject to an accounting adjustment on the basis of the business’s net assets as at 30 September 2004.”
R&SA’s share of the net assets of the Codan life and pension operations, on a UK GAAP basis, as at 31 December 2003 was £164 million (DKK1.833 billion – $301.7 million).
“After separation and transaction costs, we would currently expect the disposal proceeds to broadly reflect net asset value,” said a company bulletin. ” The net written premiums for 2003 were £324 million [$596 million] and the profit contribution for the same period was approximately £36 million [$66 million].
The transaction is in line with the Group’s strategy of focusing on general insurance and releasing capital from its life businesses and is another step in R&SA’s program aimed at concentrating on its P/C business. On Monday the company acknowledged that it was in talks to sell its U.K. Life business (See IJ Website June 21).
R&SA said it expects the sale of Codan’s life and pension operation “to release UK statutory capital and risk based capital of approximately £150 million ($276 million), which it will use to “support the Group’s focus on general insurance.”
Group CE Andy Haste stated: “This is a good deal for shareholders. It is another step in the delivery of our strategy of transforming the Group into a focused, high performing general insurance company.”
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