The firm said the sale will affect about 1 million of its customers, primarily on the retail side, who hold traditional insurance-based pensions, savings and investment products.
Its Mature Savings business, which ended the first half of 2017 with £33bn in assets under management, will be incorporated into Swiss Re’s life and pensions unit, ReAssure, which manages closed and non-core in-force portfolios for policyholders.
Last year, Mature Savings generated £105m in operating profit for the firm.
L&G told investors it intends to parlay the disposal into higher growth across its core businesses, including its investment management arm, LGIM, as well as its L&G Retirement, L&G Capital and L&G Insurance businesses.
On the back of the sale, the FTSE 100 life insurer expects to gain up to a 2% increase in its Solvency II coverage ratio and a one-off gain totalling £450m.
Carving out its mature savings business “was a difficult decision”, said Nigel Wilson, L&G’s chief executive officer, not least of all because it has been a part of the UK business for more than 50 years.
“However, we have in Swiss Re a great partner, who will be an excellent steward of the business and its many customers and policyholders,” he added.
“Selling Mature Savings is the right decision for us – another important, measured, step in growing our company and updating our products. It will drive further earnings growth by allowing us to focus on our successful market-leading businesses and to accelerate the scaling up of our growth businesses.”
L&G will receive the cash proceeds from the sale by the start of January 2018 and the formal transfer of the business is expected to be completed by mid-2019, subject to regulatory approval.
