Countrywide Assured, the estate agency group, confessed yesterday that attempts to sell its life insurance business had failed and that it would instead demerge the division as a separate listed company.
The company said talks with four interested parties had foundered over what price they would pay for the life arm and also over who would retain the liability for possible future claims for mortgage endowment mis-selling.
Christopher Sporborg, the chairman of Countrywide, said: "The view of shareholders and the board was that unless we could get a reasonable price and a clean deal, the right thing to do would be to demerge it. Of the two companies we had detailed discussions with, either the amount was not sufficient or they wanted us to retain all the risks, which is not what we wanted to achieve."
Countrywide, which has closed its life division to new business, had hoped to attract a price tag of £100m through a sale. It still hopes the business will be valued at about that amount, and that it can pay out £10m to shareholders in a dividend when shares are listed in the new business, probably after Easter next year.
The separate life company and ultimately its shareholders would have to retain all the risk of future mis-selling claims, Mr Sporborg said. Countrywide has increased provisions to cover those claims from £12m and will probably add further capital to that amount.
"We are working on the listing particulars and we will make sure everybody is happy with the arrangements," Mr Sporborg said.
Under the plan proposed yesterday, Mr Sporborg will continue to be chairman of Countrywide and will also be chairman of the new life insurer. Graham Kettleborough will become chief executive of the separately floated life arm.
Countrywide's shares rose 1p to 142.5p as analysts said that a demerged business would generate strong dividend growth, because a closed life fund requires less and less capital each year to support its falling liabilities.