Disposal

LONDON--()--

RSA announces £300m sale of operations in the Baltics and Poland

RSA Insurance Group plc announces that today it reached agreement, subject to regulatory approvals, to sell each of Lietuvos Draudimas AB (Lithuania), AAS Balta (Latvia), the business of the Estonian branch of Codan Forsikring A/S (together RSA’s operations in the Baltics), and Link4 Towarzystwo Ubezpieczen Spolka Akcyjna (Poland) to Powszechny Zakład Ubezpieczeń sa (PZU).

Assuming each of the four transactions completes (and subject to the adjustments described below), RSA will receive total aggregate consideration of approximately €360m (£300m) payable in cash. The transactions are expected to add around £200m to the Group’s tangible net assets, improving the Group’s capital strength.

Subject to obtaining relevant regulatory approvals in the respective countries, each transaction is expected to complete during the second half of 2014.

Stephen Hester, RSA Group Chief Executive said:

“These disposals are in line with our stated aim of focusing the Group’s geographical spread onto its core businesses in the UK & Ireland, Scandinavia, Canada and Latin America, and represent a good deal for our shareholders, customers and employees.

“The total sale proceeds represent significant progress against our overall target of at least £300m of disposal proceeds set for 2014, and also demonstrate the strong underlying value that exists within RSA. We will continue to evaluate further non-core disposals, some of which we expect to occur during 2014.

“In our core businesses, we will continue to target markets and segments where we can sustain leadership positions with customers whilst earning returns in excess of our cost of capital. Our ambition is for RSA to be a resilient and valuable company, performing at its best, and reliably so.”

RSA’s operations across the Baltics cover a broad range of Personal and Commercial products. At 31 December 2013, RSA’s operations in the Baltics had total assets of £258m and net assets of £83m. Net written premiums in 2013 were £166m with a pre-tax profit of £13m. The consideration payable for RSA’s operations in the Baltics is approximately €270m (£225m) including a dividend of €12m (£10m) to be paid prior to completion from Lietuvos Draudimas AB (Lithuania).

Link4 Towarzystwo Ubezpieczen Spolka Akcyjna is the leading direct insurer in Poland with strong foundations in the Motor market but also offering a range of other Personal and Commercial products. At 31 December 2013 it had total assets of £146m and net assets £40m. Net written premiums in 2013 were £75m with a pre-tax profit of £6m. The consideration payable for Link4 Towarzystwo Ubezpieczen Spolka Akcyjna is approximately €90m (£75m).

The consideration payable under each of the four transactions, each of which is subject to adjustment based on the net asset value of the relevant business as at completion, is payable in full on completion of the relevant deal. No sale is conditional upon any of the other sales occurring.

As part of the transaction, senior management are expected to remain with the respective businesses at completion.

- ENDS -

Enquiries:

Analysts       Press
Rupert Taylor Rea Louise Shield
Tel: +44 (0) 20 7111 7140 Tel: +44 (0) 20 7111 7047
 
Louise Jordan Jon Sellors
Tel: +44 (0) 20 7111 1891 Tel: +44 (0) 20 7111 7327

Notes to editors:

Exchange rates

GBP 1 : EUR 1.2

Financial Advisors

UBS Investment Bank acted as Sole Financial Advisor to RSA Group

About RSA

With a 300 year heritage, RSA is one of the world’s leading multinational quoted insurance groups. RSA has major operations in the UK, Scandinavia, Canada, Ireland, Asia and the Middle East, Latin America and Central and Eastern Europe and has the capability to write business in around 140 countries. Focusing on general insurance, RSA has around 23,000 employees and, in 2013, its net written premiums were £8.7 billion.

About PZU

PZU Group is one of the largest financial institutions in Poland and in Central and Eastern Europe with a history dating back to 1803. PZU Group provides comprehensive insurance products in all of the most important areas of private, public and business life in Poland and also has operations in Ukraine, Lithuania, Latvia and Estonia. In 2013 PZU had Gross Written Premium of PLN 16.5 billion (approximately € 3.9 bn) and its current market capitalisation is 37bn PLN (9bn EUR). The Polish State Treasury controls 35% of the company with the remaining 65% floated on the Polish stock exchange.

Important Disclaimer

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.

Short Name: RSA Ins Grp
Category Code: DIS
Sequence Number: 414605
Time of Receipt (offset from UTC): 20140417T050021+0100

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