Lloyds Banking Group has reached an agreement to divest its German life insurance business Heidelberger Lebensversicherung to a joint venture company owned by Cinven Partners and Hannover Ruck, in a cash transaction valued at €300m.
Based on the terms of the deal, funds advised by Cinven will purchase nearly 80% shares of Lloyds’ Germany insurance operation, while remaining 20% stake will be owned by the reinsurer Hannover Re.
The sale of assets by the 39% UK government owned lender is part of its strategy to curtail global exposure, boost capital and return the state aid.
As at 31 December 2012, Heidelberger Leben managed a portfolio of approximately 600,000 policies, primarily unit-linked, and had €5.2bn assets.
The banking group is likely to sustain a loss of £330m on the proposed transaction, however together with disposal of assets, the proceeds will increase the group’s common equity tier 1 capital by around £400m.
Concurrently, the British financial conglomerate has also inked an agreement to dispose of portfolio of leveraged loans to ELQ Investors II Limited, a wholly owned subsidiary of Goldman Sachs for a deal valued at £254m.