Co-op agrees £219m deal for life arm

The Co-op unveiled plans for the sale of its life and pensions arm in a deal expected to boost its chances of landing more than 600 Lloyds branches.

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.

Sign up to our Business newsletter

Sign up to our Business newsletter

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.