Direct Line Agrees Sale of Brokered Commercial Insurance Business for Up to GBP550 Million
By Joe Hoppe
Direct Line said it has agreed to sell its brokered commercial insurance business lines to Intact Financial Corp. for potentially up to 550 million pounds ($687.9 million).
The non-life insurer said Thursday it will sell the business to Intact's subsidiary RSA Insurance for an initial consideration of GBP520 million, and a potential further consideration of up to GBP30 million, contingent on financial performance. Transfer of the operational assets and liabilities to RSA is targeted for the second quarter of 2024.
Along with the consideration and earn-out, Direct Line estimates over time it will release capital of up to GBP270 million. Proceeds from the sale will be used to enhance the company's capital strength and for general corporate purposes.
Direct Line will remain active in the direct small business commercial lines insurance space through its brands "Direct Line" and "Churchill".
The value created for shareholders will allow the group to improve its capital resilience and provides a platform for improved performance," Acting Chief Executive Jon Greenwood said.
Given the size of the transaction, it is subject to shareholder approval. A notice of general meeting will be published as soon as practicable.
Write to Joe Hoppe at joseph.hoppe@wsj.com
(END) Dow Jones Newswires
September 07, 2023 02:49 ET (06:49 GMT)
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