This decision follows RSA's comprehensive strategic review and is aligned with its goal of focusing on sustainable outperformance in the UK&I segment.
As part of the agreement, Admiral will acquire RSA's UK direct personal lines operations, encompassing home and pet insurance, with an estimated annual premium of £165 million. The transaction involves the transfer of renewal rights, brands, and employees, while RSA retains the claims reserves to be run off over time.
The sale, endorsed by the boards of directors of both Intact and Admiral, is slated to conclude by the end of Q1 2024.
In a release, Admiral said the strategic move aligns with its core strategy to diversify its product offerings and cultivate multi-product customer relationships within its primary markets. The acquisition is poised to fortify Admiral's home business and expedite the development of its direct pet proposition, initially introduced in 2022.
“Increased scale in home and pet not only supports Admiral's diversification strategy, but also supports our aim to provide customers with a stronger multi-product offering, choice, and convenience. We look forward to welcoming our new colleagues and the additional expertise they bring,” said Admiral CEO Milena Mondini de Focatiis.
“Our capability and culture will ensure MORE THAN and RSA customers that join Admiral will continue to receive the high-quality cover and customer service they expect. Consistency and continuity for our new and existing customers during this migration will be our priority. With this acquisition, we continue to fulfil our purpose to help more people look after their future.”
The financial implications of this divestiture include an initial cash consideration of £82.5 million, with a potential additional payment of up to £32.5 million based on specific retention thresholds. The proceeds from the sale, combined with the release of capital backing the UK personal lines business, are estimated to reach around £350 million, inclusive of earnout provisions.
Financial advisory for Intact was provided by J.P. Morgan Securities plc, with legal counsel from Skadden, Arps, Slate, Meagher & Flom LLP. Meanwhile, Barclays acted as financial adviser and Clifford Chance as legal adviser to Admiral Group in connection with the transaction.
RSA will exit its UK home and pet partner and broker contracts, totalling approximately £515 million in annual premiums. This marks the final step in RSA's departure from the UK personal lines market, as outlined in its strategic review unveiled on September 6, 2023.
“The exit from the UK personal lines market sharpens RSA's focus as a leading UK commercial and specialty lines player, accelerating our ability to deliver sustainable outperformance in the UK&I segment,” said Intact CEO Charles Brindamour.
RSA CEO Ken Norgrove added: “We recognise the important work of our personal lines colleagues in building RSA's leading home and pet businesses. I'm confident that Admiral's shared values and track record in delivering excellence for customers makes them a perfect fit for our UK direct personal lines business. Our focus is on ensuring an orderly transition that supports our customers, colleagues, and partners.”
Despite withdrawing from the UK personal lines market, RSA will maintain its presence in Ireland, where it is recognised as a leading provider of motor, home, and commercial insurance.
