Royal & Sun sets the seal on South African insurer

Royal & SunAlliance sold its stake in a South African insurer for £100m yesterday to its rival Old Mutual, another shareholder in the company.

The sale of RSA's 37 per cent stake in Mutual & Federal represents a £20m profit for the troubled insurance company, which had to raise nearly £1bn last year to plug holes in its reserves. It has been disposing of assets for some time, shedding up to 12,000 jobs world-wide and shrinking the amount of business it writes to conserve capital.

Old Mutual said buying the stake would not dent its much-vaunted ambitions to expand in the UK. Shares in Old Mutual ended up 2.25p at 97p. "This deal does not have any impact on our internationalisation strategy," Julian Roberts, the company's finance director, said.

The company, which is listed in the UK and owns a fund management business here, has been scouring the UK market for a deal to bump up its assets. It is keen to buy a closed life insurance business and run off the funds on a cheap administration basis in South Africa. It has spent some time looking at the Britannic Group, which closed to new business last year. It is also thought to have considered HHG, the demerged arm of the Australian financial services giant HHG.

RSA has a block of life insurance funds that it closed to new business in 2002. These are also up for sale, but it is not thought that Old Mutual is, as yet, involved in the bidding for them. The RSA life funds are riddled with guarantees, which are the subject of discussions with the Financial Services Authority and are reliant on a web of loans from the parent company.

"The proceeds from the sale of Mutual Federal will be used to support the further growth of Royal & SunAlliance's core general insurance business, which is its primary strategic focus," a spokesman for the company said. He said that Old Mutual's approach for Mutual & Federal had been an opportunistic offer that RSA could not turn down for its shareholders. Old Mutual has paid for the stake in sterling. RSA shares ended down 1.25p at 97.25p.

The purchase takes Old Mutual's stake in Mutual & Federal up to 88 per cent. It will buy out the remaining 12 per cent and delist the company.

peopleFrankie Boyle responds to referendum result in characteristically offensive style
Arts and Entertainment
Highs and lows of the cast's careers since 2004
New Articles
i100... with this review
ebooksAn unforgettable anthology of contemporary reportage
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Senior BA - Motor and Home Insurance

£400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...

Market Risk & Control Manager

Up to £100k or £450p/d: Saxton Leigh: My client is a leading commodities tradi...

SQL Developer - Watford/NW London - £320 - £330 p/d - 6 months

£320 - £330 per day: Ashdown Group: The Ashdown Group have been engaged by a l...

Head of Audit

To £75,000 + Pension + Benefits + Bonus: Saxton Leigh: My client is looking f...

Day In a Page

Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

Despite the result, this is the end of the status quo

Boyd Tonkin on the fall-out from the Scottish referendum
Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

Manolo Blahnik: Flats, Englishness, and Mary Beard

The shoe designer who has been dubbed 'the patron saint of the stiletto'
The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

Scrambled eggs and LSD

Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

'Normcore': Blending in is the new standing out

Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

New leading ladies of dance fight back

How female vocalists are now writing their own hits
Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments
These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

Widespread fear of Isis is producing strange bedfellows

Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
Topshop goes part Athena poster, part last spring Prada

Topshop goes part Athena poster, part last spring Prada

Shoppers don't come to Topshop for the unique
How to make a Lego masterpiece

How to make a Lego masterpiece

Toy breaks out of the nursery and heads for the gallery
Meet the ‘Endies’ – city dwellers who are too poor to have fun

Meet the ‘Endies’ – city dwellers who are too poor to have fun

Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

Ian Paisley’s decision to make peace with his IRA enemies

His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam