Direct Line Sells overseas companies to Mapfre

Direct Line insurance group percent bought its German and Italian agencies to Spain’s Mapfre SA for €550 million ($700 million) because the employer pares back its global operations to cut charges and pay a dividend.

The U.ok.’s largest home and automobile insurer expects a pretax gain from the sale of approximately £160 million ($261 million) and will return “significantly all” of the net proceeds to shareholders, it stated in a declaration these days. The sale price is about about 1.nine instances 2013 net asset fee, Direct Line said.

Direct Line shares rose as tons as 3.1 percentage. The enterprise, which was spun off from Royal bank of Scotland institution p.c during the last  years, is the trendy British insurer to promote assets abroad as it strives to meet a value-saving target of about £1 billion [$1.63 billion] this yr.

“The sale of our global organizations to Mapfre is a good result for all of our stakeholders,” leader govt Officer Paul Geddes said within the announcement. “Our U.okay. personal and industrial strains agencies are continuing to put in force the various initiatives we've got below manner.”

shares of Direct Line rose to 306.1 pence [$3.89] at eight:17 a.m. in London. Mapfre, Spain’s biggest insurer, rose zero.2 percentage to €2.ninety three [$3.72] in Madrid trading.

Direct Line stocks surged on Aug. 1 after the organisation stated it become in talks to promote the organizations. The international unit generated £thirteen.four million [$21.84 million] of running income within the half of 12 months, in comparison with £249.1 million [$405.9 million] for the entire group, the enterprise said on the time.

Direct Line said nowadays that it had a “strong” danger-based totally capital coverage ratio of approximately 149 percentage as of June 30, which permits it to go back most of the proceeds to shareholders. Regulatory popularity of the deal is expected to take three to four months, it stated.

RSA coverage group % has raised more than £six hundred million [$978 million] from asset income in japanese Europe, Canada and China this 12 months, while Aviva p.c has reduced its markets to 17 from 28 in 2011.