Royal & SunAlliance buys Swedish insurer for pounds 316m
Tuesday 22 June 1999
The deal, which follows several months of well-publicised negotiations, will significantly boost the position in the fast- consolidating Scandinavian insurance market of Codan, Royal SunAlliance's 71 per cent owned Danish offshoot.
Trygg-Hansa is Sweden's fourth-largest insurer with a 14 per cent share of the market. Its main lines of business are motor and household insurance. Codan currently has just 2 per cent of the Swedish market.
Yesterday's deal was welcomed in the City, where Royal SunAlliance shares rose 2 per cent in an buoyant stock market. This is despite the admission by Codan's chief executive, Jens Erik Christiansen, that the group expects little in cost savings and will keep the Trygg-Hansa name. He said the deal was more about the transfer of knowledge, particularly as it would give Codan access to SEB's call-centre technology. "RSA is buying a company with assets of pounds 395m for pounds 316m," one analyst said. Trygg-Hansa made profits of pounds 138m last year.
As part of the deal, Codan is selling its banking offshoot to SEB for pounds 66m while SEB will also buy a 49 per cent stake in Codan's new unit-linked pension company, Codan Link, which plans to launch in Denmark this autumn.
Bob Mendelsohn, the RSA group chief executive, said the move was in line with the group's strategy of concentrating on expanding businesses where it believes it can be a significant, profitable player.
"The combination of Trygg-Hansa and Codan, together with the recent acquisitions in Lithuania, gives us a strong platform within the Nordic/ Baltic market from which to grow our business," Mr Mendelsohn said.
Attention is likely to switch to the larger Continental markets, such as France, Germany and Italy, where the group is significantly under-represented.
RSA last week announced plans to list its shares in New York in a move which reflects Mr Mendelsohn's desire to increase both group visibility and presence in North America.
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