In a strategic move, Intact Financial Corporation (Intact) and its subsidiary Royal & Sun Alliance Insurance Limited (RSA) have formally sold RSA’s UK direct personal lines operations to Admiral Group plc (Admiral).
The decision follows RSA’s comprehensive strategic review and is aligned with its aim to focus on sustainable performance in the UK&I sector.
Agreement of Sale
As part of the deal, Admiral will acquire RSA’s UK direct personal lines operations, which include home and pet insurance with an estimated annual premium of £165 million. The transaction involves the transfer of renewal rights, brands and employees, while RSA retains rights reserves that run over time.
The sale, approved by the boards of directors of both Akhanda and Admiral, is expected to close by the end of Q1 2024.
In a release, Admiral said the strategic move will align with its core strategy to diversify its product offerings and grow multi-product customer relationships in its primary markets. The acquisition is set to strengthen Admiral’s home business and accelerate the development of its direct pet proposition, which was initially introduced in 2022.
“Increased volume in home and pet not only supports Admiral’s diversification strategy, but also our goal of providing customers with a strong multi-product offering, choice and convenience. We look forward to welcoming our new colleagues and the additional expertise they bring,” said Admiral CEO Milena Mondini de Focatis.
“Our strength and culture will ensure that more and more RSA customers who join Admiral will continue to receive the high quality cover and customer service they expect. Stability and continuity for our new and existing customers during this migration will be our priority. With this acquisition, we will continue our mission to help more people take care of their futures.” We will continue to deliver.
The financial implications of this disposal include an initial cash consideration of £82.5 million, with a potential additional payment of up to £32.5 million based on certain retention thresholds. Proceeds from the sale are estimated to reach around £350 million, including revenue provisions, together with the release of capital to support the UK Personal Lines business.
Financial advice to Intact was provided by JPMorgan Securities plc with legal counsel from Skadden, Arps, Slate, Meagher & Flom LLP. Meanwhile, Barclays acted as financial advisor to Admiral Group and Clifford Chance as legal advisor in relation to the transaction.
RSA to exit UK personal lines market
RSA exits UK home and pet partner and broker contracts, with around £515 million in annual premiums. This marks the final stage of RSA’s exit from the UK personal lines market as outlined in its strategic review unveiled on 6 September 2023.
“Exiting the UK personal lines market will sharpen RSA’s focus as a leading UK commercial and specialty lines player, accelerating our ability to deliver a sustainable performance in the UK&I segment,” said Intact CEO Charles Brindmore.
RSA CEO Ken Norgrove added: “We recognize the important work of our individual colleagues in building RSA’s leading home and pet businesses. I am confident that Admiral’s shared values and track record in delivering excellence to customers will make him a perfect fit for our UK Direct Personal Lines business. Our focus is on ensuring an orderly transition that supports our customers, colleagues and partners.
Despite withdrawing from the UK personal lines market, RSA will retain its presence in Ireland, where it is recognized as a leading provider of motor, home and commercial insurance.