Abbey sells life businesses
Abbey is to sell its life businesses to Resolution plc.
for £3.6 billion in cash – 97% of EV
Abbey National plc announced it has entered into an agreement with Resolution plc under which Abbey will sell its entire life insurance business to Resolution plc for a fixed cash consideration of £3.6 billion. This represents 97% of the Embedded Value of the businesses being sold as reported by Abbey at 31 December 2005.
The life businesses being sold are Scottish Mutual Assurance plc, Scottish Provident Limited and Abbey National Life plc, as well as the two offshore life companies, Scottish Mutual International plc and Scottish Provident International Life Assurance Limited. Abbey will retain all of its branch-based investment and asset management business, James Hay, its market-leading self-invested personal pension company, and its Wrap business.
Separately, in order to provide continuity of product supply and service to its customers, Abbey has entered into two distribution agreements with Resolution under which:
∑ Abbey will distribute through its retail network Abbey-branded life and pensions products provided by Resolution; and
∑ Abbey will continue to be the exclusive distributor of Scottish Provident protection products to intermediaries.
In addition, Abbey has secured exclusive access to provide retail banking products to Resolution’s estimated five million policyholders.
It is envisaged that some 2,000 Abbey employees will transfer to Resolution as part of the transaction. Resolution will continue to operate the life operations from the existing Abbey premises in Glasgow. Resolution will also maintain the operations in Dublin and the Isle of Man.
Francisco Gómez-Roldán, Abbey’s Chief Executive, said:
“This is a great deal for Abbey, for our employees and for our customers. We have sold our life businesses for an excellent price and ensured continuity of service and product. We have also secured a competitive distribution agreement for our retail bank and retained our fast-growing branch-based asset management business. In addition, this deal opens up an exciting opportunity for Abbey to distribute banking products to Resolution’s customer base.
We believe Resolution has the expertise, strength and focus to manage the life businesses going forward and this deal provides a clean exit for Abbey allowing us to focus on building our banking business in the UK.”
Clive Cowdery, Resolution’s Executive Chairman commented:
“This is an excellent transaction for both groups. Abbey’s retailing skills and quality products will accelerate Resolution’s customer strategy.”
Completion of the transaction is expected during the third quarter of 2006 and is conditional upon, among other things, approval from the Financial Services Authority and relevant overseas regulators and the approval of Resolution’s shareholders.
Lehman Brothers is acting as exclusive financial adviser to Abbey in this transaction.