Lloyds offloads German life insurance firm at a loss

By on August 21, 2013
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Lloyds Banking Group is continuing its asset sell-off to meet Tier 1 requirements.

Life assurance business Heidelberger Leben is the latest of Lloyds’ assets to be sold off by the bank, in a bid to beef up its coffers. The bank has sold the insurer, which it inherited from HBOS when it took it over in 2008, for £250m – a lot less than analysts were expecting.

The sale came in at approximately half of the price Lloyds was hoping to achieve and is expected to lead to a loss on disposal of a whopping £330m.

The surprisingly low sale follows the Bank of England’s instructions to the bank back in June, that it had to increase its provisioning by a further £8.6bn. In fairness, it’s pretty hard to go out into the market and expect to get full price for any assets you own, when everybody knows your hand is being forced by the regulator.

Combined with the sale of other assets, such as a leveraged loan portfolio to Goldman Sachs for £254m, the transaction will help to increase the bank’s capital buffers by £400m.

Heidelberger Leben is being sold to a consortium including private equity investor Cinven and the German insurance group Hannover Re. It has a healthy portfolio of around 600,000 policies and around £4.4bn of assets as of December 31, 2012 but according to Lloyds, it made a £38m loss last year.

Since taking over in 2011, Lloyds chief Antonio Horta-Osorio has overseen the sale of several of the banks overseas operations such as its Geneva-based private bank Union Bancaire Privee. Who knows what the banking boss intends to offload next?

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