Old Mutual to sell Nordic unit for $3.2 billion

Old Mutual is selling its Nordic business for 22.5 billion Swedish crowns ($3.2 billion) to its Skandia Liv unit, allowing the London-based insurer to cut debt and focus on a rapidly growing African business. Skandia Liv, a mutual insurer - owned by its policyholders - which is already part of the Old Mutual conglomerate, said on Thursday it would fund the deal by selling assets, mostly shares.
Old Mutual, whose shares rose 11 percent, bought the businesses for around $6 billion late in 2005, meeting fierce opposition in Sweden at the time. It is now under pressure to divest assets, and the deal will enable Old Mutual to improve returns. "The creation of a strong and efficient Nordic champion represents a valuable opportunity for Old Mutual's shareholders and Skandia Liv's policyholders," chief executive Julian Roberts said.
Old Mutual's London-listed shares were up 11 percent at 123.1 pence at 1320 GMT. "This sale price is significantly in excess of our sum-of-the-parts component for these businesses of around 1.4 billion pounds," Goldman Sachs said in a research note. Skandia Liv is owned by Skandia AB, which sells higher-margin unit-linked life insurance products, which leave part of the investment risk with policyholders.
Founded in 1873, Skandia Liv is Sweden's biggest life insurer, with some 500 billion crowns ($71 billion) of invested assets. It always remained a mutual, and could not pay dividends to parent Skandia Nordic, in turn owned by Old Mutual. The deal will probably lead to some job cuts among the current staff of 2,300, Skandia Liv chief executive Bengt-Ake Fagerman told a news conference. "We will be fewer employees as a result, but I cannot be specific," he said. Speaking later to Reuters, he said any reductions would affect mainly Sweden. The deal needs regulator approval. Sweden's bank watchdog said that at first glance he saw no objections.