17th Apr 2014 06:50
LONDON (Alliance News) - RSA Insurance Group PLC Thursday said it has sold its operations in the Baltics and Poland for GBP300 million in cash, part of its effort to shore up its balance sheet it the wake of its recent problems in Ireland.
The insurer as forced to launch a GBP773.0 million rights issue as part of a package of measures to shore up its balance sheet in the wake of the Irish losses. The measures included the scrapping of its dividend, a cover policy underwritten by Berkshire Hathaway, and plans to raise GBP300 million from business disposals in 2014.
RSA found a GBP200 million capital hole in its Irish business after it conducted a review following the discovery of financial irregularities. It swung to a loss in 2013 due to the Irish losses and as it was hit a surge in weather-related claims because of severe flooding in parts of southern and south-west England and bad weather across Europe.
In a statement Thursday, it said had reached a deal to sell Lietuvos Draudimas AB in Lithuania, AAS Balta in Latvia, and the business of the Estonian branch of Codan Forsikring A/S, as well as Link4 Towarzystwo Ubezpieczen Spolka Akcyjna in Poland, to Powszechny Zaklad Ubezpieczen SA.
"The transactions are expected to add around GBP200 million to the group?s tangible net assets, improving the Group?s capital strength," RSA said in the statement.
The sales are expected to be completed in the second half of the year, as long as they get regulatory clearance.
RSA Chief Executive Stephen Hester, the former Royal Bank of Scotland Group PLC boss who joined the insurer in February, said the disposals wouldn't be the last the company makes. Hester replaced Simon Lee, who resigned in December in the wake of the Irish problems.
?The total sale proceeds represent significant progress against our overall target of at least GBP300 million of disposal proceeds set for 2014, and also demonstrate the strong underlying value that exists within RSA. We will continue to evaluate further non-core disposals, some of which we expect to occur during 2014," Hester said in a statement.
At the end of 2013, RSA?s operations in the Baltics had total assets of GBP258 million and net assets of GBP83 million. Net written premiums in 2013 were GBP166 million and the operations made a pretax profit of GBP13 million.
By Steve McGrath; [email protected]; @SteveMcGrath1
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