Direct Line, a non-life insurer, has announced that it will be selling its brokered commercial insurance business lines to Intact Financial Corp. for a potential sum of up to £550 million ($687.9 million).
The sale will involve transferring the business to Intact’s subsidiary RSA Insurance, with an initial consideration of £520 million and the possibility of an additional £30 million depending on financial performance. The transfer of assets and liabilities is expected to take place in the second quarter of 2024.
Direct Line anticipates that this transaction, coupled with other factors, will enable the release of up to £270 million in capital. These proceeds will be utilized to strengthen the company’s capital position and for general corporate purposes.
While Direct Line will be divesting its commercial insurance business, it will continue to operate in the direct small business commercial lines insurance sector under its existing brands, “Direct Line” and “Churchill”.
Acting Chief Executive Jon Greenwood expressed confidence that this sale would generate value for shareholders and improve the group’s capital resilience, thereby creating opportunities for enhanced performance.
