RSA Insurance Group has signed an agreement to divest its insurance business in the Baltics and Poland to Powszechny Zakład Ubezpieczeń sa (PZU), in a cash transaction worth £300m.
Baltics operations include Lietuvos Draudimas (Lithuania), AAS Balta (Latvia), the business of the Estonian branch of Codan Forsikring, whereas Polish operation comprises Link4 Towarzystwo Ubezpieczen Spolka Akcyjna (Poland).
Following completion of the transaction during the second half of 2014, which is pending receipt of regulatory approvals, it will provide nearly £200m to the RSA’s tangible net assets, thereby boosting its capital strength.
RSA Group chief executive Stephen Hester said, "These disposals are in line with our stated aim of focusing the Group’s geographical spread onto its core businesses in the UK & Ireland, Scandinavia, Canada and Latin America, and represent a good deal for our shareholders, customers and employees.
"The total sale proceeds represent significant progress against our overall target of at least £300m of disposal proceeds set for 2014, and also demonstrate the strong underlying value that exists within RSA."
The company is also planning to divest some more non-core business during 2014; however, it did not reveal the name of the operations.
"In our core businesses, we will continue to target markets and segments where we can sustain leadership positions with customers whilst earning returns in excess of our cost of capital. Our ambition is for RSA to be a resilient and valuable company, performing at its best, and reliably so," Hester added.
Under the terms of the agreement, senior management teams are expected to remain with the respective businesses at completion.