Britain's biggest car insurance company Direct Line has announced that it has agreed to sell the group's UK closed life insurance business, Direct Line Life Insurance (DLL), to Chesnara, an insurance-focused takeover specialist. (Release)
Direct Line, whose brands include Churchill, Green Flag and Privilege, said today that total proceeds of the sale tally to £62m, including a pre-closing dividend of £23m.
The company was floated at a discounted £787m by the Royal Bank of Scotland (RBS) last year, and saw after-tax profit of £6.9m for the year. The purchase will be partly funded by a new RBS loan facility of £73.8m. It follows a concerted trimming down by Direct Line, which is facing competition from online price comparison website, with the company looking to reduce annual costs by £130m by 2014.
Direct Line said today that it expects to gain approximately £12m from the disposal of DLL, and that a special interim dividend of four pence per share would be issued after the sale.