Allied Dunbar to buy Abbey Life Business
Lloyds TSB Group PLC
1 February 2000
LLOYDS TSB TO SELL NEW BUSINESS CAPABILITY OF ABBEY LIFE TO ALLIED DUNBAR
Lloyds TSB announces that it has sold the new business capability of its
subsidiary Abbey Life to Allied Dunbar, a subsidiary of Zurich Financial
Services, for £100 million of which £20 million is conditional upon the
salesforce achieving agreed sales targets over the next two years. The
majority of Abbey Life's sales advisers will be invited to transfer to Allied
Dunbar together with all of Abbey Life's sales management and support staff.
The existing Abbey Life business will continue to be administered at the
current head office site in Bournemouth. In the future, Abbey Life will focus
on providing an efficient service to its existing 1.5 million customers and
the only new business that will be undertaken will be in relation to increases
to existing plans. The value of the in-force business and net tangible
assets, which are being retained by Lloyds TSB, was £1.2 billion at the end of
December 1999.
The reported new business profits of Abbey Life are expected to be £11 million
out of total 1999 pre-tax profits, excluding pension provisions, for Abbey
Life of £158 million. Total weighted new business premium income during 1999
was in excess of £90 million. The transaction is likely to be earnings
neutral for the Lloyds TSB Group. As at 31 December 1999, the business to be
disposed had net assets of less than £5 million.
A provision of £98 million for the expected loss on the sale, after allowing
for £80 million in respect of goodwill arising on acquisition previously
written-off to reserves and other asset write-offs, will be included in the
accounts of Lloyds TSB for year ended 31 December 1999.
Peter Ellwood, Group Chief Executive of Lloyds TSB, said:
'After careful consideration we have decided to sell the new business
capability of Abbey Life to Allied Dunbar. The distribution of life, pensions
and investment products through a self-employed salesforce no longer fits our
Group strategy. The offer from Allied Dunbar is attractive financially and
ensures a future for the salesforce.
'The proposed acquisition of Scottish Widows will allow Lloyds TSB to focus
its life, pensions and investments capability on the key bancassurance and
Independent Financial Adviser distribution channels where the combined Group
will have a market leadership position.'
For further information:
Lloyds TSB press office
Tel no: 0171 626 1500
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