UK Life Company Business Sold
Old Mutual PLC
4 January 2000
OLD MUTUAL PLC
Old Mutual plc disposes of UK Life Company business
Old Mutual plc announces that it has entered into conditional
contracts, subject to regulatory, and other approvals, to dispose
of the business of Old Mutual Life Assurance Company Ltd ('OMLA'),
its UK life insurance subsidiary.
The principal components of the transactions are as follows:
First, the existing immediate annuity book of OMLA will be
transferred under a treaty of reassurance to XL Mid Ocean
Reinsurance Ltd, the Bermuda-based specialist reinsurance
underwriters.
Second, the remaining non-linked and linked life business of OMLA
will be sold to Century Life plc and subsequently transferred to
Century Life under a proposed scheme of arrangement under Section
2c of the Insurance Companies' Act 1982.
Century Life is part of the Century Group, which specialises in
administering life insurance businesses. The transfer of OMLA's
life insurance business to Century, which has operated on a closed-
book basis since 1998, is subject to approval by the Financial
Services Authority, and the proposed scheme of arrangement must be
approved by the UK High Court before it becomes effective. An
independent actuary will be appointed to report to the Court and
to policyholders on the proposed scheme.
The combined impact of these transactions, once completed, is
expected to release back to the Old Mutual Group during 2000
capital to the value of approximately £75 million, a surplus to
book value of approximately £15 million.
At the time Old Mutual plc announced its Interim Results to 30
June 1999 the Group made additional provisions of £52.5 million in
respect of certain liabilities of OMLA for pensions which brought
total reserves to approximately £102 million. Old Mutual considers
that these provisions remain adequate in the light of current
information to cover future claims, and an indemnity to the
purchasers has accordingly been provided by the Company to this
effect.
Commenting on the disposal, Eric Anstee, Group Finance Director of
Old Mutual plc said:
'We commenced these negotiations some time ago as part of our
demutualisatin and flotation of the Group. It is gratifying that
we have now been able to conclude this series of agreements
successfully, subject to the necessary regulatory consents. This
will substantially bring to a close our UK insurance activities,
which were not producing satisfactory returns. By releasing OMLA's
capital back to the Group, shareholders will be able to benefit
from the redeployment of assets. Equally the annuitants and
policyholders of OMLA will benefit from the established servicing
capabilities of Century Life and Mid Ocean both of which have
first class names and standing in the UK market place.'
4 January 2000
Enquiries:
Old Mutual plc
James Poole, Director IR 44 (0) 171 569 0121
Philip Vosloo Media Relations 27 (0) 21 509 1727
Jane Bernsten, Communications Manager 44 (0) 1256 743 484
College Hill London 44 (0) 171 457 2020
Mark Garraway
Nicholas Willimas
College Hill Johannesburg 27 (0) 83 6002459
Graham Fiford
Century
Chris Little, CEO 44 (0) 171 332 5010
Notes to editors
XL Mid Ocean
1.1 XL Mid Ocean Reinsurance is a wholly-owned subsidiary of XL
Capital Ltd, which provides insurance and reinsurance plus other
financial products on a worldwide basis. The Group had
approximately US$14.1 billion of assets and US$5.4 billion of
consolidated shareholders equity as at 30th September 1999.
1.2 XL Mid Ocean Reinsurance is based in Bermuda, with branch
operations in London and Singapore and an office in Munich,
Germany. The company is a leading reinsurer, writing property
catastrophe, property risk excess of loss, property pro rata,
marine, energy, aviation and other reinsurance to insurers
worldwide.
Century
2.1 Founded in 1983 Century Life has grown principally through
acquisition. It has successfully integrated 14 life assurance
companies or blocks of business, including NEL Britannia Group,
Sentinel Life plc, and Prosperity Financial Services Ltd.
2.2 Century Life's acquisition activity has required major
investment in flexible, integrated, customer-orientated computer
systems. The consequent strength of the company's customer service
and administrative capabilities has formed the basis of its
success in moving into the provision of outsourced administration
to other life companies.
Old Mutual
3.1 Old Mutual plc is an international financial services group,
based in London, with a substantial life assurance business in
southern Africa and an integrated portfolio of activities in asset
management (including unit trusts and portfolio management and
stockbroking services), banking and general insurance.
3.2 On 12 July 1999, Old Mutual plc listed on the London,
Johannesburg, Namibia, Malawi and Zimbabwe Stock Exchanges. On 20
September, Old Mutual joined the FTSE 100 Share Index.
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