Euro reform and funding may hamper move to sell Partnership

Insurance analysts believe Cinven’s plans to offload Partnership Assurance could falter due to uncertainty around European regulatory reforms and difficulties in attracting funding.

Reports last week said Cinven had spoken to Morgan Stanley, Goldman Sachs, Lexicon Partners and Deutsche Bank about a possible £750m sale and is currently choosing an adviser.

Insurance analysts say only Resolution, which has distanced itself from any big acquisitions before 2013, has the resources to undertake a deal of this scale.
Investec insurance analyst Kevin Ryan says: “I think an asking price of £750m is very ambitious, given that pre-tax profits in 2010 were only £35.4m.”

A specialist life insurance analyst, who did not want to be named, says: “I do not think there will be a stampede of insurers looking to buy it. Funding is difficult and, with Solvency II up in the air, people are not sure about capital requirements.”

Finance & Technology Research Centre director Ian McKenna says: “Partnership has broken new ground in enhanced annuities, which is an area that the big providers will inevitably want to enter.”

A Partnership spokesman says: “We do not comment on market speculation.”