Swiss Life took another step in its withdrawal from the UK yesterday by selling its group insurance business to rival provider UnumProvident in a move that will result in the loss of a further 250 jobs at the company.
The terms of the deal were undisclosed, but it involves the transfer of 1,800 income protection schemes for corporate customers that cover 280,000 people, as well as the rights to renew the critical illness cover of 6,800 policies that provide for 1.3 million people.
Swiss Life, which reported a record loss of 1.7bn Swiss francs last year, has been seeking to exit the UK in an attempt to conserve capital on its balance sheet. The UK market is seen as 'capital intensive' for the group. It puts its whole UK business, which employs around 700 people, up for sale in September. But last month it said it had failed to find a buyer willing to pay the right price and Swiss Life closed its UK individual insurance division to new business. Swiss Life's group insurance division would also have been closed to new business had it not secured a buyer.
UnumProvident,the UK's largest provider of critical illness and income protection insurance to corporate customers, has been interested in Swiss Life for some time. It will take on board the running of Swiss Life's existing policies and will not need the 250 people that work in Swiss Life's group business as it will transfer the policies to its own locations.
Some Swiss Life staff will be invited to reapply for jobs with UnumProvident but they will have to relocate. A number, however, will stay on at Swiss Life's Liverpool office over the next two years to help administer the transfer. This is the second similar acquisition for UnumProvident this year, following on from its purchase of Sun Life Financial of Canada's group risk business in January.
Rolf Doerig, the chief executive that was brought in to turn around Swiss Life's fortunes, said yesterday: "We want to focus all our energies on core business and to restore profitability. By transferring group risk business from Swiss Life UK to UnumProvident, we can take a further step in this direction."
The group employs 11,000 people across the world and has been battling against heavy investment losses and accounting errors that caused it to restate its results. Since Mr Doerig's appointment in November, it has announced 1,500 job cuts. Swiss Life's closed individual business is still potentially up for sale and is likely to be of interest to a number of players that specialise in administering closed books. Swiss Re, which recently bought the UK life business from Zurich Financial Services, is known to have been interested in some of Swiss Life's UK assets. Swiss Life has been operating in the UK since 1967.