Sale of International and return of capital

RNS Number : 5571S

Direct Line Insurance Group PLC

25 September 2014

 



Sale of International operations and return of capital

25 September 2014

Direct Line Insurance Group plc ("Direct Line Group" or the "Group") announces that it has reached a binding agreement with Mapfre, S.A. ("Mapfre") for the sale of the Group's International division, which comprises its Italian and German operations. The sale concludes the strategic review initiated earlier in 2014.

Total cash sale proceeds of €550.0 million (£430.5¹ million) represent 1.9 times 2013 net asset value² and 36.9 times 2013 normalised earnings³. The Group is expecting to recognise a pre-tax gain on disposal of approximately £160 million. The sale agreement includes certain transitional arrangements including a licence to use the Direct Line brand in Italy and Germany for three years. The transaction is conditional on the approvals of relevant regulatory authorities which are expected to take approximately three to four months.

The Group has a strong capital position as demonstrated by a risk-based capital coverage ratio of 148.8% at 30 June 2014, which was at the top end of its risk appetite range. Consequently, it is expected that substantially all of the net proceeds will be returned to shareholders and further details of this capital return will be provided at completion.

Paul Geddes, CEO of Direct Line Group commented:

"We believe that the sale of our international businesses to Mapfre is a good result for all of our stakeholders, providing excellent value for our shareholders, while offering our customers and colleagues stability and opportunity.

"Meanwhile, our UK personal and commercial lines businesses are continuing to implement the many initiatives we have under way to deliver our strategic priorities."

The Group will release its third quarter 2014 Interim Management Statement on 31 October 2014.

For further information, please contact:

Neil Manser

Director of Corporate Strategy and Investor Relations

Tel: [phone]

Jennifer Thomas

Head of Financial Communications

Tel: [phone]

Notes:

1.    Euro proceeds converted to an equivalent amount of GBP based on the GBPEUR spot rate as at London close on the 24 September 2014.

2.    The International division had a net asset value at 31 December 2013 of €283.9 million (£230.1 million), tangible net asset value of €278.4 million (£225.5 million) and gross assets of €1,590.8 million (£1,298.8 million).

3.    Normalised earnings for 2013 were €14.9 million which have been adjusted for the higher than normal hailstorm claims in Germany and exceptional costs.

Direct Line Insurance Group plc
Direct Line Group is headquartered in Bromley. Through its number of well known brands the Group offers a wide range of general insurance products to consumers. These brands include Direct Line, Churchill and Privilege. The Group also provides insurance services for third parties through its partnerships division, Brand Partners. In the commercial sector, the Group's NIG and Direct Line for Business operations offer insurance products for businesses distributed through brokers or direct, respectively.

 

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