Lloyds TSB is to sell its closed life insurance business, Abbey Life, to Deutsche Bank in a deal worth close to £1bn.
Lloyds TSB announced on Tuesday that subsidiary Scottish Widows had reached an agreement with the German bank to sell the business for £977m, with the deal expected to go through in the second half of 2007.
Scottish Widows Investment Partnership has entered into a 10-year contract to continue to manage Abbey Life’s funds as part of the arrangement.
Abbey Life, which has been closed to new business since 2000, has £12bn of assets across 1.2 million policies. Lloyds TSB said the business was up for sale in February.
Deutsche is the latest player to enter the UK closed life fund market and is thought to have beaten a rival bid from Pearl to buy Abbey Life.
Lloyds TSB group chief executive Eric Daniels says: “We came to the conclusion that a sale of the business is in the best interest of the group, as well as Abbey Life’s policyholders and staff.”
Deutsche Bank head of global rates Michele Faissola says: “We see significant convergence between insurance business and capital markets and believe we are optimally placed to act as a principal to enhance yields and manage risk for the benefit of all stakeholders.”