Co-op agrees £219m insurance sale

THE Co-operative Group has agreed to sell its life insurance and asset management business to Royal London for £219m.

In a statement to the markets Royal London said it had entered into a “binding agreement” with the Co-operative Banking Group to buy the Co-operative Insurance Society business and the Co-operative Asset Management arm.

Royal London said the deal would boost its funds under management by 40% from £50bn to £70bn. However, it is only paying £39m up front with the balance of £180m deferred until certain conditions are met.

The Co-op first revealed its intention to sell the divisions, which employ 170, in July 2011 and has been in talks with Royal London ever since.

The shake-up was prompted by a strategic review of its life and savings business that took place after the merger with Britannia Building Society in 2009.

Barry Tootell, chief executive of The Co-operative Banking Group, said: “This decision reflects changes in the life assurance market and our focus on developing a compelling co-operative offer for our millions of customers and members.

“The completion of this agreement is expected to generate a significant release of capital. The transfer of our life assurance and asset management businesses to Royal London will ensure the continued protection of our policyholders, within a strong, mutual business with the necessary scale and focus on the long-term savings sector.

“As member-owned organisations, we have much in common with Royal London, which has a track record of delivering strong performance for policyholders and a real focus on delivering good customer service. We believe this is the best outcome for our policyholders and members.”

The acquisition is subject to regulatory approval and a vote of members at both mutuals.