RSA continues drive for cash with Â£147m sale of health insurer
Saturday 05 April 2003
Royal & Sunalliance yesterday sold its UK health insurance unit for £147m to a management team as part of an ongoing effort to raise cash to restore its financial health.
The troubled insurer said a management buyout team led by Tim Ablett, head of the UK operations of the French mutual insurer Groupama, and backed by Barclays Private Equity, had bought the unit.
Barclays Private Equity is paying £87m for a 90 per cent stake in the business, which provides private medical insurance and personal accident and other specialist insurance. The balance of the £147m asking price is financed by a £70m debt facility.
The remaining 10 per cent of the business will be owned by eight key executives who have invested £750,000 between them. Mr Ablett, who ran the RSA unit three years ago, will be chief executive while Steve Wood, its current head, will be managing director. Both men will own stakes of 1.5 to 2 per cent.
RSA estimated yesterday that the sale would release capital of £247m from a combination of the profit on disposal and the reduction in premium income – which it will use to support its other insurance businesses. Duncan Boyle, RSA's UK chief executive, said: "The disposal of the healthcare business allows Royal & SunAlliance to unlock significant value from the sale of a specialist business that is not strategic to the group."
The disposal is the latest in a line of asset sales it has been carrying out to shore up its balance sheet. It is also in the process of floating its Australian and New Zealand business, called Promina.
Analysts at Credit Suisse First Boston said: "We view this [the disposal] as good unexpected news for RSA. It is a business which the company had not previously identified as one lined up for disposal."
In 2002, the healthcare unit made a profit of £45m which included a one-off profit of £13m relating to releases of prior year claims provisions. As at the end of last year, the healthcare unit's net assets were about £9m and net written premiums for the year were around £273m.
- 1 Cyclist who knocked down three-year-old girl says his life has been 'destroyed'
- 2 A politically correct lefty goes to see Top Gear live – you'll probably believe what happened next
- 3 Young Preston fan has play-off hero Jermaine Beckford's shirt stolen from him at Wembley - which then appears for sale on Gumtree
- 4 Isis burns woman alive for refusing to engage in 'extreme' sex act, UN says
- 5 Puerto Rico, island of lost dreams: People are leaving the debt-hit territory in droves as near neighbour Cuba's star rises
As a white man, I'm surprised more women aren't tweeting the hashtag #KillAllWhiteMen
Scotland may have to leave the EU even if it votes to stay in, David Cameron confirms
The day that Britain resigned as a global power
SNP fury as HS2 finds 'no business case' for taking fast train service to Scotland
EU referendum: David Cameron to deny EU migrants and under-18s the chance to vote
A nation of inequality: How the UK is failing to feed its most vulnerable people
iJobs Money & Business
£40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...
£45,000 - £55,000: Neil Pavier: Are you looking for your next opportunity for ...
£45,000 - £55,000: Sheridan Maine: Are you a newly qualified ACA/ACCA/ACMA qua...
£50,000 - £60,000: Laura Norton: Are you looking for an opportunity within a w...