Legal & General Group Plc has agreed to sell its general insurance (“GI”) business to Allianz Holdings plc.
The proposed transaction, which is subject to customary regulatory approvals, is expected to be completed in the second half of 2019, Legal & General said in a statement.
Legal & General added that 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.
Legal & General said that its group's Solvency II ratio is expected to increase by approximately two percent following completion of the transaction. The proceeds from the disposal will be reinvested in Legal & General's core businesses, according to the company.
The GI business being sold comprises principally retail customers who hold household insurance policies. Legal & General said that, in 2018, gross written premiums were £410 million and operating profit was “nil.”
Nigel Wilson, the chief executive officer 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 10 U.K. markets and have a growing presence in the U.S.A. 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, the chief executive officer of Allianz UK, said, “This is a good outcome for all the parties involved.” Mr. Dye added that the “Allianz Group has worldwide insurance experience, is robustly capitalized, and has a strong reputation for customer service and these strengths will be applied to grow the business.”
Victoria Spears
Victoria Prussen Spears is senior vice president of Meyerowitz Communications Inc., a law firm marketing communications consulting company. A graduate of Sarah Lawrence College and Brooklyn Law School, Ms. Spears was an attorney at a leading New York City law firm before joining Meyerowitz Communications. She may be contacted at [email protected].