RSA Insurance Group plc (‘RSA’) announces today that it has signed contracts, subject to regulatory approvals, to sell its operations in Latin America (‘RSA Latin America’) to Suramericana S.A., the insurance subsidiary of Grupo de Inversiones Suramericana (‘Grupo SURA’) for approximately £403m payable in cash.
Stephen Hester, RSA Group Chief Executive said:
“We are pleased to announce the disposal of our Latin American businesses to Suramericana. With RSA’s focus on its largest markets in the UK & Ireland, Scandinavia and Canada, it has become increasingly clear to us that RSA is no longer the best strategic owner of these businesses. In Suramericana we have an experienced and committed regional player who can make the business a much more central part of their strategy.
“At £403m cash purchase price this sale is expected to be strongly accretive to capital for RSA, enhancing operational flexibility. This is the largest remaining disposal we have underway and is consistent with our stated target to substantially complete RSA’s strategic refocus by the 2015 year end results announcement.”
RSA Latin America is a pan-regional insurance platform and one of the top ten international insurers in the region. It has an established presence in Chile, Argentina, Brazil, Mexico, Colombia and Uruguay, with a balanced portfolio mix.
RSA Latin America had total assets of £1,336m and net tangible assets of £258m at 31 December 2014 (restated at 31 August 2015 exchange rates). Net written premiums in the first half of 2015 were £333m with a post-tax profit of £9m. The transaction is expected to be significantly positive for RSA’s capital ratios on all measures following completion.
The transaction is subject to obtaining relevant regulatory approvals in each of the countries. It is anticipated that all completions will have concluded by the end of 2016.
As part of the transaction, senior management in each of the respective country operations are expected to remain with the respective businesses at completion.
Zurich Insurance was made aware of this sales process in recent discussions prior to and following the announcement of 25 August. This transaction is not conditional on the outcome of their possible offer for RSA.
Rupert Taylor Rea
Group financial performance & investor relations director
Notes to editors
Goldman Sachs International acted as Sole Financial Advisor to RSA.
With a 300 year heritage, RSA is a multinational quoted insurance group. RSA has core operations in the UK & Ireland, Scandinavia, and Canada, and has the capability to write business in around 140 countries. Focusing on general insurance, RSA has around 19,000 employees and, in 2014, its net written premiums were £7.5 billion.
With more than 70 years of history, Suramericana is one of the main insurance groups in Colombia and Central America with a total client base of 10 million customers. Suramericana is a subsidiary of Grupo SURA (81.1%). The remaining stake is held by Munich Re (18.9%).
This press release may contain ‘forward-looking statements’ with respect to certain of the Group’s plans and its current goals and expectations relating to its future financial condition, performance results, strategic initiatives and objectives. Generally, words such as “may”, “could”, “will”, “expect”, “intend”, “estimate”, “anticipate”, “aim”, “outlook”, “believe”, “plan”, “seek”, “continue” or similar expressions identify forward-looking statements. These forward-looking statements are not guarantees of future performance. By their nature, all forward-looking statements are inherently predictive and speculative and involve risk and uncertainty because they relate to future events and circumstances which are beyond the Group’s control, including amongst other things, UK domestic and global economic business conditions, market-related risks such as fluctuations in interest rates and exchange rates, the policies and actions of regulatory authorities, the impact of competition, inflation, deflation, the timing impact and other uncertainties of future acquisitions or combinations within relevant industries, as well as the impact of tax and other legislation or regulations in the jurisdictions in which the Group and its affiliates operate. As a result, the Group’s actual future financial condition, performance and results may differ materially from the plans, goals and expectations set forth in the Group’s forward-looking statements. Forward-looking statements in this press release are current only as of the date on which such statements are made. The Group undertakes no obligation to update any forward-looking statements, save in respect of any requirement under applicable law or regulation. Nothing in this press release shall be construed as a profit forecast.
Goldman Sachs International, which is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority in the United Kingdom, is acting for RSA and no one else in connection with the matters referred to in this announcement and will not be responsible to anyone other than RSA for providing the protections afforded to clients of Goldman Sachs International, or for giving advice in connection with the matters referred to in this announcement or any matter referred to herein.