Prudential strikes deal with Winterthur
Winterthur, the insurance arm of the Credit Suisse Group, is to pay £353 million (SFr841 million) in cash for the general insurance business of British insurer Prudential.
The announcement from Prudential on Friday came as part of the British group’s shake-up of its domestic operations.
Under the deal with Winterthur, Prudential will transfer its British general insurance business to Winterthur and the Churchill Group, its British subsidiary.
A report in the Financial Times on Thursday said Winterthur had beaten rival bids from Direct Line, Royal and Sun Alliance and CGNU.
Prudential, Britain’s second biggest insurer, said it would also axe 2,100 jobs by the end of 2003 to cut costs at its UK operations. Analysts had been forecasting around 2,500 job losses as the company moves to improve its profit margins.
Prudential, expanding rapidly in Asia, began restructuring its home business earlier this year, axing its direct sales force.
The cash raised by the sale of Prudential’s general insurance business provides extra cash for the group’s core life insurance and pensions business.
Winterthur reported in August a 15 per cent increase in net premiums earned compared with the corresponding period of the previous year.
The company said at the time that in many markets, particularly at its British subsidiary, Churchill, the premium growth was supported by strong rate increases.
Net operating profit at Winterthur for the first half of 2001 stood at SFr350 million, up 7 per cent on the corresponding figure for 2000.
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