Legal & General Group Plc (LON:LGEN) announced that it has agreed to sell its General Insurance business to Allianz Holdings plc. The proposed transaction, which is subject to customary regulatory approvals, is expected to complete in the second half of 2019.
The financial consideration from the proposed sale consists of a base price of £242 million payable at completion and potential further payments over a three year period from ongoing commercial arrangements. The base price is commensurate with IFRS book value. The Group’s Solvency II ratio is expected to increase by approximately 2% following completion of the transaction. The proceeds from the disposal will be reinvested in Legal & General’s attractive and growing core businesses.
The GI business being sold comprises principally retail customers who hold household insurance policies. In 2018 gross written premiums were £410 million and operating profit was nil.
Legal & General is confident that selling the GI business to one of the world’s largest property and casualty insurers will mean that customers can trust they are in safe hands.
The sale by Legal & General of the GI business is the latest in a successful programme of disposals in recent years across the Group’s non-core businesses, including its historic savings businesses (Mature Savings, Cofunds, Suffolk Life and its international savings businesses in Ireland, Egypt and Germany), its international insurance businesses in the Netherlands, France and India, and various other non-core businesses. These disposals have generated proceeds in excess of £1.5 billion.
Nigel Wilson, CEO of Legal & General said:
“Selling the General Insurance business is the right decision for our customers and shareholders. And I would like to take this opportunity to thank our GI colleagues for their contribution to Legal & General.
We continue to focus on delivering against our strategy, allocating shareholders’ capital rigorously. We are market leaders in ten UK markets and have a growing presence in the USA and an emerging presence in Asia. Deploying capital in these businesses will deliver better outcomes for all our stakeholders. Our GI customers will benefit from the strength and capability of Allianz in the household insurance sector.”
Jon Dye, CEO of Allianz UK said:
“This is a good outcome for all the parties involved and acquiring a high quality business with 2 million customers to combine with the LV= General Insurance business is a strong result. The Allianz Group has worldwide insurance experience, is robustly capitalised and has a strong reputation for customer service and these strengths will be applied to grow the business.”