Co-op ditches plan to sell general insurance business
THE Co-operative Group has cancelled the process to sell its general insurance business, with the mutual saying it no longer needs to raise as much money after its revised bank rescue deal.
The group hoisted the ‘for sale’ sign over the insurance arm last March, as at that time it was still looking to boost its balance sheet ahead of the proposed acquisition of bank branches from Lloyds.
As the crisis in the bank unfolded with the emergence of a £1.5bn capital shortfall, the sale was seen as an important strand of the Co-op’s restructuring.
But after bondholders foreced a rethink on the initial plans to shore-up the bank’s balance sheet – the organisation did not have to pump in as much as first planned – although it has lost all but a 30% stake in the bank.
In a statement today the group said: “The revised terms of the recapitalisation plan (for the bank) involve a smaller group contribution and have allowed the group, as part of its wider strategic review, to reconsider its plans.
“The group today is pleased to announce its intention to cancel the sale process and keep the General Insurance business. In reaching this decision, the Group has taken into account the General Insurance business’s significant growth potential.”
The Co-op said it will now meet its additional capital commitment to the bank recapitalisation plan through the disposal of the life and savings business, as planned, and other measures, most notably the strategic management of a limited number of property assets across the group’s businesses.
Chief executive Euan Sutherland said: “Having considered the sale process, and in light of the changed requirements on us under the bank recapitalisation process, we believe it is in the best interests of our members, customers and colleagues, that we retain this strong business and develop it further. We received a significant amount of interest in the General Insurance business, which reflects its potential. “
See also: Watchdog probes KPMG audit of Co-op Bank
