30 July 2004 – Royal & SunAlliance (R&SA) today announces the sale of its UK Life operations to Resolution Life Group for a consideration of £850m comprising £750m of cash together with £100m of preference shares. Resolution Life Group is a newly formed group that has been established for the sole purpose of buying and running closed UK life funds. Resolution Life Group is backed by capital from leading institutional investors, including a number of pension funds and investment trusts who are aiming to achieve long term stable dividends over 20+ years. Sir Brian Williamson, who was previously Chairman of LIFFE, chairs the Group. The Group’s Chief Executive is Clive Cowdery, formerly Chief Executive of GE Insurance Holdings.
The disposal is in line with R&SA’s strategy of focusing on general insurance and further strengthens its capital position. It follows the closure to new business of the UK Life business in 2002. R&SA has around 2.4 million remaining UK life policies in force, of which around 1 million are long-term savings policies.
Under the terms of the sale, Resolution Life Group will continue to apply the Principles & Practices of Financial Management (PPFM) put into place by R&SA. Any subsequent changes to the PPFM would be made in consultation with the Financial Services Authority (FSA). This means that policyholders should not see any material change to their policy terms and benefits. Following the sale, customers will continue to benefit from the Financial Services Compensation Scheme (FSCS) and have access to the Financial Ombudsman Service (FOS). Similarly, R&SA’s existing customer service and administration arrangements will continue after Resolution Life Group has acquired the business.
The change of control of the life companies from R&SA to Resolution Life Group is subject to approval by the Financial Services Authority (FSA). In giving its approval, it will consider, amongst other things, whether the interests of policyholders are protected. The FSA has three months to consider an application for change of control. R&SA’s shareholders will also be asked to approve the sale at an Extraordinary General Meeting to be held in September. A circular containing further details of the sale and a notice of Extraordinary General Meeting will be sent to R&SA shareholders in due course.
Policyholder communication about sale
Under its commitment to policyholder communication, R&SA will place an advertisement in the Daily Telegraph, The Times, Daily Mail and Daily Express, explaining what the sale means for customers, and drawing their attention to information about the sale on R&SA’s internet site (www.royalsun.com/life). The company will be writing to all policyholders once the FSA and R&SA shareholders have completed the change of control approval process. Duncan Boyle, Royal & SunAlliance’s UK Chief Executive, commented: “We believe that the sale of R&SA’s UK Life operations to Resolution Life Group represents the best outcome for R&SA’s customers, employees and shareholders, following our decision to focus on general insurance. Resolution Life has a long term commitment to the management of closed funds and will continue to apply the R&SA Principles of Financial Management”
