L&G sells Dutch arm to Chesnara for €160m

Legal & General has agreed to sell its Netherlands business to London-listed pensions firm Chesnara for €160m (£135.6m), the latest disposal from the insurer as it looks to consolidate its overseas operations.

The sale of the Dutch arm is expected to improve the FTSE 100 company's coverage ratio and result in a small profit.

Mark Gregory, L&G’s chief financial officer, said the company is focused on having "scalable businesses in growth markets" and has sold a number of operations it no longer regards as core over the last two years, including its Irish, French, Egyptian and Gulf businesses.

The company has also sold the Suffolk Life self-invested personal pension plan business in the UK and has agreed to sell Cofunds, a UK investment platform, to Aegon for £140m.

Chesnara said the purchase price of €160m represents a 33% discount to Legal & General Nederland’s economic value of €239m and roughly a 27% discount to the own funds of €220m.

Chesnara will fund the cash consideration via a combination of a £70m of equity via a placing and open offer at 300p, with €71m of new debt facilities used to partially fund the transaction and £40m to refinance part of the existing debt facilities of £52.6m, with the balance from its own cash resources.

Chesnara’s chief executive, John Deane, said: "As with our Swedish subsidiary Movestic, we will be writing protection and pension policies. This will complement our closed block consolidation business Waard. We see great opportunities for both organisations within the Chesnara group to deliver value to our customers, their advisors and our shareholders."

The company said the acquisition would enhance its long-term cash generation and supported its dividend strategy.

Legal & General Netherlands' works council has been asked for advice on the transaction, which is required under Dutch law, and the sale is subject to regulatory approval.