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LONDON (Alliance News) - Legal & General Group PLC said Friday it has sold its General Insurance business to German insurer Allianz SE for a base price of GBP242 million.
L&G said there could be potential further payments over a three-year period based on ongoing commercial arrangements.
The deal is expected to be completed in the second half of 2019.
The L&G General Insurance business mainly sold household insurance to retail customers. In 2018, the unit saw GBP410 million in gross written premiums with a zero operating profit.
L&G said the sale is expected to increase the company's solvency II ratio by about 2%.
The FTSE 100-listed financial firm - which provides pet, car and life insurance and also advice on pensions, retirement and investments - said the money from the disposal will be reinvested into the company's core businesses.
"We continue to focus on delivering against our strategy, allocating shareholders' capital rigorously. We are market leaders in 10 UK markets and have a growing presence in the USA and an emerging presence in Asia. Deploying capital in these businesses will deliver better outcomes for all our stakeholders. Our GI customers will benefit from the strength and capability of Allianz in the household insurance sector," said L&G Chief Executive Nigel Wilson.
The General Insurance sale is the latest is a succession of disposals by L&G in recent years, which includes its historic savings businesses - Mature Savings, Cofunds, Suffolk Life - and its international savings businesses in Ireland, Egypt and Germany. L&G has also recently offloaded its international insurance businesses in the Netherlands, France and India. Combined, these disposals have raised "in excess" of GBP1.5 billion.
Allianz said it will be combining its new acquisition with its Liverpool Victoria Friendly Society business.
Allianz UK Chief Executive Jon Dye said: "This is a good outcome for all the parties involved and acquiring a high quality business with 2 million customers to combine with the LV= General Insurance business is a strong result. The Allianz group has worldwide insurance experience, is robustly capitalised and has a strong reputation for customer service and these strengths will be applied to grow the business."
Allianz and LV= announced Friday that Allianz is acquiring the remaining 30% of LV='s General Insurance unit it did not already own for GBP365 million. The deal means LV= is ending its general insurance partnership with Allianz - who will not own 100% of LV= General Insurance, which is valued at GBP1.08 billion.
In December 2017, Allianz acquired an initial 49% stake in LV= General Insurance for GBP500 million, with a second stage transaction taking place at the end of 2019 where Allianz acquired a further 20.9% stake, for GBP213 million, through an agreed, forward purchase.