RSA said it would dispose of £834m of UK legacy insurance liabilities in a deal that will strengthen its capital position and allow the insurer to focus on its continuing businesses.
The insurer is offloading the liabilities to Bermuda-based Enstar Group, which specialises in buying and managing insurance portfolios in run-off mode.
RSA said the deal would add 17-20 points to its so-called Solvency II coverage – the European Union regulations that state how much capital insurance companies must hold to reduce the risk of insolvency.
Stephen Hester, RSA group chief executive said:
We are pleased to have achieved this valuable risk clean-up transaction with Enstar. It allows us to focus even more on driving the outperformance of RSA’s continuing businesses. Earnings accretion, risk reduction and capital improvement are a happy combination to report.
RSA Insurance said in November it had benefited from the drop in sterling and expected a strong increase in operating earnings for the tax year . Over two-thirds of the company’s profits are generated overseas.
The company will announce results on 23rd February.