Royal London, the UK’s largest mutual life and pensions company, has agreed to pay £219m for the Co-op’s life insurance and asset management business, increasing its funds under management to around £70bn.
The deal comes as the Co-op looks to fill a reported £1bn capital hole in time to save its planned takeover of branches from Lloyds Banking Group.
It is understood to be considering other asset sales, including its non-life insurance business, in order to boost its capital strength.
The Financial Services Authority has reportedly identified the deficit in the Co-op’s capital reserves in an industry-wide review of balance sheet strength.
The Co-operative Insurance Society (CIS) was formed in 1867 and has two million life and savings customers. Subsidiaries that will transfer to Royal London include CIS Unit Managers, a unit trust business.
The acquisition is subject to regulatory approval and a vote of Royal London members at a meeting due to be held by the middle of the year.
The Co-op’s asset management arm holds around £20bn of assets in a range of investment portfolios including pension funds.