Sale of Direct Line Life & proposed capital return

RNS Number : 9382P

Direct Line Insurance Group PLC

08 October 2013

 



Sale of Direct Line Life and proposed capital return

8 October 2013

Direct Line Insurance Group plc ("Company"), the holding company of the "Direct Line Group" (or the "Group"), announces that it has reached a binding agreement with Chesnara plc ("Chesnara") for the sale of Direct Line Group's UK closed life insurance business, Direct Line Life Insurance Company Limited ("DLL"). 

Total sale proceeds of £62 million, which include a pre-closing dividend of £23 million, represent 85% of the embedded value of DLL at 30 June 2013.  In the financial year ended 31 December 2012, DLL reported a profit after tax of £6.9 million. Direct Line Group is expecting to recognise a gain on disposal of approximately £12 million. The transaction is conditional on the approval of Chesnara shareholders and of relevant regulatory authorities, which is currently expected within 60 business days. 

The proceeds of the sale of DLL represent inorganic capital generation and the Company's Board of Directors believes that in this instance it is appropriate to return the sale proceeds to shareholders. Assuming the sale completes as expected, the Board intends to declare a special interim dividend of 4.0 pence per share shortly after completion of the sale. The sale of DLL and the proposed subsequent dividend are not expected to have a material impact on Direct Line Group's capital position.

Separately, the Group is reviewing opportunities to offer its customers access to appropriate life products and is currently testing a distribution only 'white-label' pilot for term assurance.

Direct Line Insurance Group plc

Direct Line Insurance Group plc (Direct Line Group) is headquartered in Bromley, Kent; it has operations in the UK, Germany and Italy.

Through its number of well known brands Direct Line Group offers a wide range of general insurance products to consumers. These brands include; Direct Line, Churchill and Privilege. It also offers insurance services for third party brands through its Partnerships division. In the commercial sector, its NIG and Direct Line for Business operations provide insurance products for businesses via brokers or direct respectively.

In addition to insurance services, Direct Line Group continues to provide support and reassurance to millions of UK motorists through its Green Flag breakdown recovery service and TRACKER stolen vehicle recovery and telematics business.

For further information, please contact:

Neil Manser

Director of Investor Relations and Corporate Development

Tel: [phone]

Rob Bailhache

Director of Communications

Tel: [phone]

 

END

 

 

DISEANEXEFXDFFF