RSA weighs disposal of businesses in Scandinavia

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The Independent Online

Royal & SunAlliance, the insurer struggling to turn around its business after years of heavy losses, said yesterday it was reviewing its options for its Scandinavian operations after receiving approaches from potential bidders.

Royal & SunAlliance, the insurer struggling to turn around its business after years of heavy losses, said yesterday it was reviewing its options for its Scandinavian operations after receiving approaches from potential bidders.

The company has been shedding subsidiaries across the world to reduce risk in the group and conserve cash after being hit with mounting liabilities in the US. It has closed down the majority of its business in the US, but Scandinavia, alongside the UK and Canada, was marked out as one of its key markets.

RSA's Danish and Swedish operations, which include a 71.5 per cent stake in Denmark's third biggest insurance company Codan, accounted for about 20 per cent of group sales. Codan has a market value of about 11.7bn kroner.

The group's life operations in Denmark had been on the market for at least a year but its general operations in Denmark and Sweden have now also attracted attention. It is thought that Scandinavian rivals are trying to buy the businesses. The Finnish bancassurer Sampo is reported to be circling Codan for a possible takeover. Nordea, another Scandinavian financial group, and the Danish-Norwegian Tryg Vesta are also thought to be interested.

RSA shares closed up 1.49 per cent at 85.25p on the news. Many analysts have been critical of RSA's strategy of focusing on Scandinavia, which they see as a potential poor performer, and would support a move away from the region. The company may establish a joint venture with a partner in Scandinavia.

Over the past year, RSA, under its chief executive Andy Haste, has raised more than £1bn from disposals and the flotation of its Australian and New Zealand businesses. But it had to carry out an emergency rights issue at the end of last year to prop up reserves in the US. It is still trying to sell its life businesses in the UK, once valued at about £2bn, but is struggling to find a buyer willing to take on the companies, which are riddled with costly guarantees.

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