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Legal & General To Sell Closed Mature Savings Unit To Swiss Re For GBP 650 Mln

Legal & General Group Plc (LGEN.L) announced Wednesday that it has reached agreement to sell its Mature Savings business to the ReAssure division of Swiss Re Ltd (SSREY.PK) for 650 million pounds.

The proceeds, to be satisfied in cash, will be received by Legal & General at the start of January 2018. Swiss Re will assume the economic exposure of the business from 1 January 2018 via a reinsurance structure.

It is expected that the formal transfer of the business will be completed in mid-2019, subject to satisfaction of normal conditions for a transaction of this type including court sanction. Swiss Re has agreed an investment management agreement with LGIM to continue to manage the funds transferred.

The transaction is expected to generate a small increase in the group Solvency II coverage ratio at outset, increasing to approximately 2% on completion of the Part VII transfer. The sale of the business is expected to generate a one-off IFRS gain on completion of the Part VII transfer, anticipated in 2019, of about 450 million pounds.

The net proceeds of the transaction will be reinvested in the attractive growth opportunities of Legal & General's core businesses.

The business being sold comprises principally retail customers who hold traditional insurance based pensions, savings and investment products. Its assets at first half of fiscal 2017 of 33 billion pounds include both unit-linked business and Legal & General's 21.4 billion pounds with-profits fund. With around 1 million customers, it has largely been closed to new business.

The company noted that Swiss Re's ReAssure division is a life and pensions business designed to manage closed and non-core in-force portfolios.

"By transferring the Mature Savings business to Swiss Re we are confident that this will deliver positive results for the existing Legal & General customers who will benefit from this focus and economies of scale in the specialisms required," the company said in its statement.

Following the disposal, Legal & General will accelerate its growth agenda in the areas including Investing & Annuities through Legal & General Retirement and Legal & General Capital; Investment Management through LGIM; and Insurance through Legal & General Insurance and General Insurance.

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