The Co-operative Insurance Society (CIS) and The Co-operative Asset Management (TCAM) will initially be operated as subsidiaries.
The deal will result in a £20bn increase in AUM for Royal London, from £50bn to £70bn, while its customer base should increase from four million to six million. A total £180m of the sale price will be deferred until assets of the same value within CIS are made available to Royal London.
The CIS Long Term Business Fund will be maintained for the benefit of its with-profits policy holders, which will be transferred to Royal London at some time in the future. After that point, Royal London will provide policy administration, asset management and governance services under an agreed expenses arrangement with the CIS Fund.
The deal is subject to regulatory approval.
The Co-operative Banking Group chief executive, Barry Tootell, said: “This decision reflects changes in the life assurance market and our focus on developing a compelling co-operative offer for our millions of customers and members. The completion of this agreement is expected to generate a significant release of capital.
“The transfer of our life assurance and asset management businesses to Royal London will ensure the continued protection of our policyholders, within a strong, mutual business with the necessary scale and focus on the long-term savings sector.”
Royal London acquired Royal Liver life assurance group in 2011, but the Liverpool-based operation was shut in 2012.
