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The Sydney Morning Herald

Royal & Sun to float spurned Asia-Pacific operations

Author: Anthony Hughes
Date: 08/11/2002
Words: 298
          Publication: Sydney Morning Herald
Section: Business
Page: 21
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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