Allied World Assurance Co, a subsidiary of Switzerland-based Allied World Assurance Holdings, is to buy the Hong Kong and Singapore operations of UK-based Royal & Sun Alliance Insurance plc (RSA) for £130m. Senior management are expected to remain with the respective businesses at completion.
The businesses purchased include a niche group of specialty lines, including casualty, construction and engineering, marine and property. The books cover both commercial and personal lines.
President and chief executive Scott Carmilani said that "the business brings regional market leadership, complementary product offerings, extensive distribution and experienced and talented management team to Allied World, strengthening our global insurance franchise".
Allied World will acquire the in-force portfolio, plus the related assets and liabilities of both branches. The acquirer also anticipates that an additional $90m (£55m) "will likely be required to appropriately capitalize the business on an ongoing basis".
The transaction is expected to complete in H1 2015.
RSA said that the transactions were likely to generate a gain on the sale of about £110m, and an addition to the group's tangible net assets of about £95m. Chief executive Stephen Hester said that "this transaction builds further on the momentum of our recently announced disposals in the Baltics, Poland, Canada (Noraxis) and China, and represents continued progress against out aim of tightening the strategic focus of the group."
Hester also said that further disposals were planned over the next 12 to 18 months to complete the process.
RSA Singapore had net written premiums of £66m in 2013, with a pre-tax profit of £12m. The operation had total assets of £236m and net assets of £30m at the end of last year. Allied World is paying about £93m for the Singapore business.
The Hong Kong business had net written premiums of £47m in 2013, generating a pre-tax gain of £5m. It had total assets of £185m and net assets of £0.4m as of December 31 2013. Allied World is paying about £37m for the Hong Kong business.