Shares in Britain's Royal & Sun Alliance rallied today after the firm confirmed it was in talks to sell its problematic British life insurance arm.
"These discussions are at an early stage," Royal & Sun Alliance (RSA) said in a brief statement, confirming weekend media reports.
The Financial Timessaid on Saturday that Resolution Life Group, set up by the former chief executive of GE Insurance Holdings Europe, Clive Cowdery, was understood to have offered £750 million sterling in cash and £150 million in deferred payments for the business.
RSA said the FT's reported price of £750 million was speculative, and a spokesman declined to elaborate on which buyers might be after the unit.
Problems at the life division have forced Britain's second-largest general insurer to abandon global ambitions and focus on general insurance.
It has shed 20,000 jobs and issued new shares to shore up its balance sheet in the face of tighter funding rules in Britain, mounting claims in the United States and a recent prolonged stock market slump.
RSA had previously considered raising capital by issuing bonds structured to securitize the life unit's future cash-flow, but this option now is seen as unlikely.
Early this morning, RSA shares were 3.4 per cent higher at 83 3/4 pence, after touching a two-month high of 84 1/2p, and valuing the business at about £2.4 billion.