Disposal

RNS Number : 6896L

Standard Life plc

11 May 2010

 



Standard Life plc

Sale of Standard Life Healthcare to Discovery for £138 Million in Cash

Standard Life plc ("Standard Life") announces that it has agreed to sell Standard Life Healthcare Limited ("Standard Life Healthcare") to a subsidiary of Discovery Holdings Limited ("Discovery") for £138 million payable in cash at completion.*

The transaction is subject to approval by the Financial Services Authority and the South African Reserve Bank and is expected to complete by 31 July 2010.

Standard Life's strategic focus is on the long-term savings and investments market and as a result the manufacturing of private medical insurance ("PMI") is not core to its UK strategy. The net cash proceeds from the sale will be used for general corporate purposes including the acceleration of Standard Life's key initiatives to grow its business. At completion approximately 562 employees will transfer as part of the transaction.

Standard Life Healthcare is the fourth largest provider of PMI in the United Kingdom with a market share of approximately 8 per cent, offering a full range of products to individuals, SMEs and large corporate clients. In 2009, Standard Life Healthcare generated IFRS profit before tax of £9.4 million (2008: £7.1 million) and profit after tax of £7.1 million (2008: £5.0 million). Standard Life Healthcare had total assets of £258.5 million and net assets of £97.1 million as at 31 December 2009.

Chief Executive of Standard Life, David Nish, commented:

"Standard Life Healthcare is a leading and successful business in the UK PMI market, but in the context of sharpening our strategic focus on the long-term savings and investments market we concluded it is not core. Discovery is a highly respected global health insurer with an established presence in the UK.  The sale provides an excellent outcome for Standard Life Healthcare's customers, commercial partners and employees as well as for Standard Life's shareholders."

Discovery, listed on the Johannesburg stock exchange with a market capitalisation of ZAR 20.9 billion (£1.9 billion**), is a leading financial services institution operating in insurance, long-term savings and well-being in South Africa, the United Kingdom, the United States and China. In the UK Discovery operates via a joint-venture with Prudential plc, that comprises PruHealth, a specialist private medical insurance provider, and PruProtect, a provider of pure risk protection products.

Following completion and a transitional period the intention is to re-brand Standard Life Healthcare under the PruHealth brand.

Chief Executive of Discovery, Adrian Gore, said:

"We are excited by the opportunity to acquire a business of Standard Life Healthcare's quality.  Standard Life Healthcare's focus on delivering the highest quality of products and service is consistent with our own approach. The assets of Standard Life Healthcare and PruHealth are highly complementary and we believe that the combined business will be well-positioned for future growth as a leader in the PMI market."    

* Total consideration will be adjusted with reference to Standard Life Healthcare's tangible net asset value on 30 June 2010 

** ZAR/ GBP exchange rate of 11.13 as at 10 May 2010

11 May 2010

Enquiries
Standard Life
Media:
Nicola McGowan	0131 245 4016/07872 191 341
Institutional Equity Investors:
Duncan Heath	0131 245 4742
Debt Investors:
Andy Townsend	0131 245 7260
Scott Forrest	0131 245 6045
Fenchurch Advisory Partners (Financial advisers to Standard Life)
Malik Karim	020 7382 2222
Chris Deville	020 7382 2222
Discovery
Media :
Susanne Stevens	00 27 82 606 2077 [e-mail]
Institutional Equity Investors:
Richard Farber, Discovery CFO	00 27 82 445 0945 [e-mail]
Prudential
Media:
Izabella Siemicka	020 7121 8513 [e-mail]

Notes to editors:
1.	As at the date of announcement, the acquiring entity is Discovery Offshore Holdings 2 Limited, a subsidiary of Discovery. However, under the terms of the transaction, Discovery has the right to nominate another Discovery group company or PruHealth to be the purchaser prior to completion.
2.	It is anticipated that today's announcement will not impact Standard Life Healthcare's customers with their terms and conditions initially remaining the same. The status of any customers in hospital or about to undergo treatment also remains unchanged but for those who have queries regarding the service they will receive, they should contact our help line on 0845 602 5678.
3.	Standard Life has over 6 million customers worldwide and provides an extensive range of long term savings and investments products and services, aimed at meeting the financial requirements of customers throughout their lives.
4.	In 2009, Standard Life reported new business sales across its long term savings operations of £14.5 billion, of which £10.2 billion (Note 1) were generated from its UK business. EEV operating profit before tax for 2009 was £919 million. Group embedded value was £6,435 million at 31 December 2009 and FGD surplus was £3.6 billion.

Note 1 - New business sales are measured on a Present Value of New Business Premium (PVNBP) basis.

Fenchurch Advisory Partners, which is authorised and regulated by the Financial Services Authority, is acting as exclusive financial adviser to Standard Life and no one else in connection with this transaction and will not be responsible to anyone other than Standard Life for providing the protections afforded to clients of Fenchurch Advisory Partners or for providing advice in connection with this transaction or any other matter referred to herein.

 

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