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After failing to offload part of the business quietly over the past year,
cash-strapped UK insurer Royal & SunAlliance revealed last night it would float
its Asia-Pacific operations, including the well-known AAMI general insurance and
Tyndall funds management businesses.
It is expected that Royal & Sun will opt for a clean exit from the operation,
leaving the local management team the challenge of creating a reinvigorated
force in the consolidating Australian general insurance and funds management
markets.
With the Australian operations representing the bulk of revenues and profits
in the region, the managing director of Royal & SunAlliance Australia and the
former boss of Tyndall, Mike Wilkins, will become chief executive of the new
entity. RSA's Asia-Pacific director, Ewoud Kulk, will become non-executive
chairman.
Macquarie Bank and Goldman Sachs are advising on the float, scheduled for the
first half of 2003 and potentially raising more than $2 billion depending on
the inclusion of other Asian businesses.
Mr Wilkins was reluctant to talk up the group's prospects before the release
of a prospectus. But he said: ``I think that this is in the best interests of
all the relevant stakeholders. We believe the IPO helps our parent but also
causes minimum disruption to our businesses and minimum disruption to our
customers."
Royal & Sun said the value of its Asia-Pacific division was not reflected at
group level and there were limited synergies between it and the rest of the
group. There was significant intrinsic value through an IPO, which would reduce
the group's net written premiums by #1 billion ($2.7 billion).
Royal & Sun last night announced a nine-month operating result of #471
million, up from #307 million but still not acceptable according to acting chief
executive Bob Gunn.
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