Lloyds Banking Group has signed an agreement to sell its German life insurance business Heidelberger Leben for a cash consideration of around €300 million, as it looks to meet regulatory capital demands.
The insurer will be sold to a joint venture company owned by Cinven Partners LLP and Hannover Rück SE for approximately £250 million at current exchange rates.
Heidelberger Leben is a specialist provider of unit-linked pension, investment and life assurance products in Germany.
The senior management employed by Heidelberger Leben will move with the business on completion of the sale.
The business will continue to service the Group's policies in Germany and Austria written under the Clerical Medical brand, under a long-term administration agreement.
The gross assets subject to the transaction are £7.2 billion, which are predominantly policyholder assets. In the year to 31 December 2012 the business reported a statutory loss of £38 million.
Lloyds revealed the sale is expected to lead to a loss on disposal of approximately £330 million in the Group's accounts but, combined with the sale of other assets, is currently expected to result in a benefit to the Group of approximately £0.4 billion upon completion.
The cash proceeds from the sale will be used for general corporate purposes.
The sale is in line with the Group's strategy of rationalising its international presence and ensuring value for shareholders, it also said.
The transaction is subject to regulatory approval and is expected to complete in early 2014.