RSA agrees to sell two Asian branches for about £130m

RSA Insurance Group agreed to sell the insurance businesses of its branches in Singapore and Hong Kong to Allied World Assurance Co for about £130m (€163m) in cash as it retreats from markets.

The sale of RSA Singapore and RSA Hong Kong will result to a gain on sale of about £110m and an addition to the group’s tangible net assets of £95m, boosting capital, the insurer said in a statement yesterday. The transactions will be completed early 2015.

RSA chief executive Stephen Hester is seeking to reverse a decade of acquisitions that saw RSA expand in more than 30 countries. The former banker said last month that he’s ahead of a three-year plan to remake the insurer as he mulls further asset sales in the wake of an accounting scandal in Ireland last year and a £775m rights issue.

“The transaction builds further on the momentum of our recently announced disposal in the Baltics, Poland, Canada and China and represents continued progress against our aim of tightening the strategic focus of the group,” Hester said in the statement. “Further disposals are targeted over the next 12 to 18 months to complete this process.”

RSA said on August 7 that it had a pretax profit of £69m in the first half after a loss of £494m in the second half of 2013. Hester, who took over from Simon Lee who quit in December amid an accounting scandal involving the company’s Irish business, plans to resume dividends in the full year.

The company operates in France, Belgium, Germany, Italy, the Netherlands, Spain, the UK and Ireland after selling its eastern European and Polish assets to PZU SA in April. It also owns businesses in the Middle East and India.

Both the Singapore and Hong transactions need regulatory approval in the respective countries. Allied World Assurance will pay about £93m for the Singapore business and £37m for Hong Kong operations.

RSA said that senior management are expected to remain within the respective businesses.

Bloomberg