RSA Insurance Group has announced that it has reached an agreement, subject to regulatory approvals, to sell the insurance business of each of its branches in Singapore(RSA Singapore) and Hong Kong(RSA Hong Kong) to Allied World Assurance Company.
Assuming each transaction completes, RSA will receive aggregate consideration of approximately £130m payable in cash. The transactions are expected to result in a gain on sale of approximately £110m and an addition to the Group’s tangible net assets of approximately £95m, further improving the Group’s capital strength.
Subject to obtaining relevant regulatory approvals in the respective countries, each transaction is expected to complete during the first half of 2015.
Stephen Hester, RSA Group chief executive, comments “This transaction builds further on the momentum of our recently announced disposals in the Baltics, Poland, Canada (Noraxis) and China, and represents continued progress against our aim of tightening the strategic focus of the Group. Further disposals are targeted over the next 12-18 months to complete this process.”
RSA Singapore and RSA Hong Kong underwrite a balanced mix of commercial specialty and retail(both commercial and personal) business.
RSA’s operations in Singapore had total assets of £236m and net assets of £30m at 31st December 2013. Net written premiums in 2013 were £66m with a pre-tax profit of £12m. The consideration payable for RSA Singapore is approximately £93m.
RSA’s operations in Hong Kong had total assets of £185m and net assets of £0.4m at 31st December 2013. Net written premiums in 2013 were £47m with a pre-tax profit of £5m. The consideration payable for RSA Hong Kong is approximately £37m.
The consideration payable under each transaction, each of which is subject to adjustment based on the net asset value of the relevant business as at completion, is payable in full on completion of the relevant deal. Neither sale is conditional upon the other sale occurring.
As part of the transaction, senior management are expected to remain with the respective businesses at completion.
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