8th Sep 2015 05:55
LONDON (Alliance News) - RSA Insurance Group PLC on Tuesday said it has signed contracts to sell its operations in Latin America to Suramericana SA, the insurance subsidiary of Colombia's Grupo de Inversiones Suramericana, for about GBP403.0 million in cash, the last of its larger businesses to be disposed of under a restructuring plan.
In a statement, RSA said that Zurich Insurance Group AG, which has shown interest in making a GBP5.6 billion takeover offer for its smaller rival, was made aware of the sale process. "This transaction is not conditional on the outcome of their possible offer for RSA," the company said.
RSA Chief Executive Stephen Hester said the FTSE 100 insurer's concentration on its largest markets in the UK & Ireland, Scandinavia and Canada mean it is no longer the best owner of the Latin American operations, which boast an established presence in Chile, Argentina, Brazil, Mexico, Colombia and Uruguay.
"In Suramericana we have an experienced and committed regional player who can make the business a much more central part of their strategy," Hester said in a statement.
Hester said the deal will boost the insurer's capital levels, a positive development for its balance sheet and operational flexibility. The GBP403.0 million sale price is a premium to the Latin American business's net tangible assets of GBP258.0 million at the end of 2014. Its net written premiums in the first half of 2015 amounted to GBP333.0 million with a post-tax profit of GBP9.0 million.
"This is the largest remaining disposal we have underway and is consistent with our stated target to substantially complete RSA's strategic refocus by the 2015 year end results announcement," Hester said.
Hester was admired in the City for his leadership of The Royal Banking of Scotland Group PLC in the wake of its GBP45.5 billion bailout in the financial crisis of 2007-09.
He has been chief executive at RSA since February 2014, when he was assigned to restore the insurer to health in the wake of an accounting scandal at its Irish business and rising claims.
With the help of a GBP773 million rights issue and the sale of numerous businesses, Hester has put RSA on a stronger footing.
By Samuel Agini; [email protected]; @samuelagini
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