L&G Joins Battle For Co-Op Insurance Arm
Legal & General, the FTSE 100 insurance and pensions giant, is joining the battle to take over a slice of the troubled Co-Operative Group after tabling an offer for the mutual's household insurance operation.
Sky News understands that L&G, which has been on an acquisition spree under its new chief executive, has submitted a bid for the household insurance book that the Co-Op has earmarked for disposal as it seeks a £1.5bn rescue package for its banking operation.
L&G is only understood to be interested in the Co-Op's home insurance business and not its motor insurance book, an approach which is forcing the mutual's advisers to examine different ways of carving up the insurance business.
The household insurance book is thought to be worth several hundred million pounds, although analysts have a broad range of views about the price-tag that the Co-Op will be able to command for the business.
L&G has made a number of acquisitions since Nigel Wilson, its former finance director, took over as chief executive last year. It owns a stake in Cala, the Scottish housebuilder, and bought Cofunds, an online investment platform, in March.
Among the other bidders for the Co-Op general insurance operation are Catalina Holdings, a consolidator of general insurance firms, and Anacap, a specialist financial services investor which last week lost out with an attempt to acquire 314 branches from Royal Bank of Scotland.
Separately, Advent International has been working with the former chief executive of RSA Insurance, Andy Haste, on a possible offer for the Co-op arm.
The mutual's proposals to fill a £1.5bn black hole in the balance sheet of the Co-operative Bank, which were approved by the industry regulator in June, have angered bondholders who will be forced to take a significant hit on the value of their investments.
The Co-op's new chief executive, Euan Sutherland, has insisted that he will not sell any of the mutual's other assets, including the Funeralcare arm, which has also attracted interest from buyout firms.
His ability to resist such offers may, however, depend to a degree on the price he is able to command for the general insurance unit, with analysts' estimates varying over its value from £250m to as much as £600m.
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.
The Co-Op and L&G both declined to comment.