Financial News

  • 13 December 2013, 10:55

Goldman Aids L&G's 60m Co-op Insurance Bid

The Wall Street banking giant Goldman Sachs has been drafted in to aid a plot by Legal & General to buy the struggling Co-operative Group's general insurance arm.

Sky News understands that L&G's chief executive, Nigel Wilson, has recruited Goldman to prepare an offer of as little as 60m for part of the Co-op unit.

L&G has joined forces with Catalina Holdings, a specialist consolidation vehicle, with a view to splitting the Co-op insurance business between its back book and ongoing policies.

A preferred bidder is unlikely to be identified for several more weeks, although L&G and Catalina are expected to be well-positioned to agree a deal.

Goldman's involvement, which was agreed this week, follows its investment through its merchant banking arm in Hastings Direct, the motor insurer.

The Co-op is trying to raise hundreds of millions of pounds as part of its contribution to filling a 1.5bn black hole in the balance sheet of its banking arm.

LV - the mutual previously known as Liverpool Victoria - and Anacap, a private equity firm, are also examining bids for the Co-op's insurance arm, which has a high-quality household book, but less valuable motor insurance assets.

Analysts have a broad range of views about the price-tag that the Co-op will be able to command for the business.

The mutual, which is reeling from allegations about the conduct of its former chairman, Paul Flowers, took an important step to strengthening its board on Thursday by appointing Lord Myners, the former City Minister, as its senior independent director.

The Co-op's new chief executive, Euan Sutherland, has said that he does not want to sell any of its other assets, such as the Funeralcare arm, which has also attracted interest from investment firms.

Deutsche Bank is handling the sale on behalf of the Co-op, whose life insurance operation has already been sold to Royal London for nearly 220m.

L&G declined to comment.

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