Compagnie UAP to sell off Sun Life shares

Shares in Sun Life, the UK life insurer with more than pounds 19bn of funds under management, are to be sold to both private and institutional investors, netting its French owner, Compagnie UAP, about pounds 500m.

The partial sale of Sun Life and Provincial Holdings, which also includes UAP Provincial, a general insurance subsidiary; and New Ireland, a life and pensions provider in the Republic of Ireland, will take place next month.

Analysts yesterday valued the combined company at about pounds 1.3bn, suggesting that UAP may retain about 55 per cent of the firm under its direct control. The deadline for retail offers will be 10 June, with the allocation of shares taking place 11 days later.

Private investors will be able to bid for shares in the combined holding, with a minimum investment of pounds 1,000. However, Michael Hart, chief executive of Sun Life and Provincial, said yesterday that he did not see the partial flotation as one for investors to draw large instant profits from.

"I hope this is not a stagging issue," Mr Hart said. "The offer price will be very fair so there is a good after-market. But this is not the sort of offer that should involve stagging. This is a good business with a long track record."

UAP's decision to seek a partial flotation follows a similar strategy to the one adopted towards other subsidiaries it owns in Germany and Belgium. Mr Hart said the aim was to enhance Sun Life's profile and also to provide the company with greater flexibility.

The proceeds from the offer will repay a loan to UAP and reduce Sun Life's other borrowings.

Sun Life is one of the top five life assurance companies, as measured by its 1995 regular and single premiums. Last year, it made pre-tax profits of pounds 90.2m, while gross premium income stood at pounds 1.6bn. The company receives 80 per cent of its business through independent financial advisers.

UAP Provincial is the 13th largest non-specialist UK insurer and reported pre-tax profits of pounds 64.2m last year. New Ireland is the second-largest life and pensions provider in the Republic of Ireland and posted pre- tax profits of IRpounds 10.4m in 1995.

Sun Life and Provincial Holdings has been totally owned by its French parent since 1995 when it bought out a 50 per cent stake from Transatlantic, the US insurer, for about pounds 525m.