UK-based RSA Insurance is to sell its Baltics and Polish businesses to Polish state-controlled insurer Powszechny Zaklad Ubezpieczen sa (PZU).
The businesses to be sold in the £300m deal are Lithuania-based Lietuvos Draudimas AB, Latvia-based AAS Balta, and the Estonian branch of Codan Forsikring A/S, plus direct business Link4 in Poland.
At the end of 2013 RSA's operations across the Baltics, which write a range of Personal Lines and Commercial products, had total assets of £258m and net assets of £83m. Net written premiums in 2013 were £166m, with a pre-tax profit of £13m. The sale price is about £225m. This sum includes a dividend of £10m to be paid prior to the completion of the purchase of the Lithuanian business.
Poland-based Link4 is mainly focused on motor insurance, although it sells some other personal lines and commercial products. At the end of 2013 it had assets of £146m and net assets of £40m. Net written premiums last year were £75m, generating a pre-tax gain of £6m. The sale price is about £75m.
PZU said this morning that it paid €180m (£148m) for Lietuvos Draudimas, €48m (£39.5m) for AAS Balta and €30m (£24.6m) for the Estonian unit of Codan Forsikring, all amounts pending adjustments.
For PZU the deal makes a small dent in its cash pile of about €2.7bn.
RSA said that, assuming the successful completion of the four sales, the move would add about £200m to its tangible net assets. The sales are expected to close during the second half of 2014.
RSA group chief executive Stephen Hester said that the disposals were "in line with our stated aim of focusing the Group's geographical spread onto its core businesses in the UK and Ireland, Scandinavia, Canada and Latin America".
He also noted that the total sale proceeds represented "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 insurer said that it would continue to evaluate further possible disposals of non-core assets, some of which it expects to announce this year.
Analysts were generally positive on the deal for RSA, feeling that the insurer had elicited a good price for a portfolio of subsidiaries that were known to be non-core and which RSA was under some pressure to sell, given its financial position,