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Quilter quits life assurance with £425mln sale to ReAssure

The wealth management group, which was spun out of Old Mutual a year ago, also reported 5% growth in first-half profits

Quilter PLC - financial advice
Quilter is becoming more focussed on wealth management business, including financial advice

Quilter PLC (LON:QLT) has agreed to sell its life assurance business to Swiss Re’s ReAssure arm for £425mln cash and reported 5% growth in first-half profits in interim results released a day early.

The FTSE 250 group, which was spun out of Anglo-South African parent Old Mutual PLC (LON:OMU) last summer, said it was prepared to distribute a “meaningful” chunk of the net sale proceeds to shareholders and would confirm whether this would be via special dividend or share buyback when the deal closes, which is expected before the end of the year.

The cash price is 1.2 times the size of the division’s funds at the end of 2018, following dividend payments of £130mln made to Quilter during the course of 2019.

Investors will receive an interim dividend of 1.7p per share after assets under management and administration grew 8% to £118.4bn since the December year end, mostly from market performance, with the ongoing business growing at 9% amid net new business of just £0.3bn as the life assurance arm shrank 2%.

Reshaping the business

The life assurance arm contributed £26mln profit before tax, down 4%, while the remaining business grew adjusted PBT 7% to £89mln as operating margins gained 1% due to the acquisitions of financial planning business Charles Derby in February and financial advisory chain Lighthouse in June.

“We are focussed on making Quilter a simpler, more efficient wealth management business, and the announcement today of the sale of Quilter Life Assurance is a further significant step forward in this regard,” said chief executive Paul Feeney.

With the acquisitions of Charles Derby and Lighthouse, consolidating Quilter’s number two place for retail advice in the UK, Feeney said his aim was to “make advice more valued and accessible, and want Quilter to be recognised as the best place to go for trusted financial advice in the UK”.

He admitted there had been some short-term delays and guided to additional spend on the IT platform transformation project of £25mln and completion by mid-2020 rather than end-2019.

Noting that PBT was 7% ahead of consensus expectations but the dividend was slightly behind, analysts at UBS said the sale of the life assurance unit "should improve investor appetite due to the simplification of the investment case, the higher proceeds achieved and the resultant likely capital return".

Shares in Quilter were down 1% to 138.6p on Friday morning.

Quick facts: Quilter PLC

Price: 122.2 GBX

LSE:QLT
Market: LSE
Market Cap: £2.19 billion
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