Insurance group and takeover target RSA has sold its Latin American arm for £403m cash.
The business, which is currently being wooed by Zurich, has inked the deal with Suramericana, the insurance subsidiary of Grupo de Inversiones Suramericana – more commonly known as Grupo Sura.
RSA Latin America had total assets of £1.34bn and net tangible assets of £258m as at 31 December last year and is a top 10 international insurer in the region, with a presence in Chile, Argentina, Brazil, Mexico, Columbia and Uruguay.
The transaction is expected to be "significantly positive for RSA’s capital ratios on all measures" following completion, which is expected by the end of 2016.
RSA chief executive Stephen Hester said: "We are pleased to announce the disposal of our Latin American businesses to Suramericana. With RSA’s focus on its largest markets in the UK & Ireland, Scandinavia and Canada, it has become increasingly clear to us that RSA is no longer the best strategic owner of these businesses. In Suramericana we have an experienced and committed regional player who can make the business a much more central part of their strategy.
“At £403m cash purchase price this sale is expected to be strongly accretive to capital for RSA, enhancing operational flexibility. This is the largest remaining disposal we have underway and is consistent with our stated target to substantially complete RSA’s strategic refocus by the 2015 year end results announcement.”
Zurich Insurance was made aware of this sales process in recent discussions "prior to and following the announcement of 25 August", RSA added.
RSA's share price climbed more than one per cent in morning trading.