Co-op finance seeks suitors

THE Co-operative Group is considering a potential sale of its £18bn life and pensions business, it emerged this weekend.

A source close to the company said the group was exploring the possibility of a sale and that an information pack was “doing the rounds.”

Two potential bidders include Resolution and Phoenix, firms that specialise in buying insurance and pension closed books. However, there are thought to be no frontrunners or stand out bids for the business so far, despite a number of expressions of interest from potential bidders.

Deutsche Bank has been hired to advise on any possible sale of the business, although the Co-op is under no pressure to sell and may still decide to continue as it is.

Any valuation of the company would come in at a fraction of the £18bn of assets – probably in the region of around three per cent putting a value on the life and pensions business at around £540m.

The strategic review was instigated earlier this year following the Co-operative’s acquisition of Britannia building society in January 2009.

Neville Richardson, the former head of Britannia building society became chief executive of Co-operative Financial Services and has been leading the integration of the two businesses ever since, including the strategic review.

Co-operative Financial Services is in good shape. Profits jumped 50 per cent in the first half of 2010 to £75m. But the insurance arm has been hit hard by the economic downturn. Co-op’s insurance services division made a pre-tax profit of £25m in 2009 - the last available set of results - down 50 per cent on a year earlier.