Young Driver
R&SA sells US car insurance business
Fri, 29 Jul 2005
Royal and Sun Alliance (R&SA) plans to sell its US car insurance business to Sentry Insurance, for a cash price of $200 million.
The sale, which was planned in March, will "further reduce the group's exposure to the US, while providing the US operation with additional capital support", said spokesman Andy Haste.
As a result, it is thought that the US statutory RBC ratio of the remaining US businesses will increase by 0.4 per cent on a pro forma basis.
The asking price is expected to generate a post tax gain of around $135 million, which means it is a very good transaction for the group.
At the beginning of this month, net assets came in at $69 million so the post tax gain represents a price of two times pro forma book value.
Royal & Sun Alliance is one of the world's oldest and most well established insurance groups providing all kinds of cover from specialist young driver car insurance to more general home insurance policies.
Recent financial problems have seen the once global firm retreat from a number of overseas markets.
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