Skandia settles long-running dispute over sale
AFP/The Local · 3 Oct 2008, 12:28
Published: 03 Oct 2008 12:28 GMT+02:00
Under a deal brokered by Swedish arbitrators, Skandia's mutually run life insurance unit, Skandia Liv, has lost a claim for part of the proceeds of the £260 million ($460 million) disposal in 2002, Old Mutual said in a statement on Friday.
"The key point is that the arbitration committee ruled that Skandia doesn't have to compensate Skandia Liv for the actual sale price," said Greig Paterson, an analyst with Keefe, Bruyette and Woods, to the Reuters news agency.
Skandia Liv had claimed it was entitled to part of the proceeds of the sale of Skandia Asset Management, which managed Skandia Liv's assets.
The business was sold to Norway's Den Norske Bank.
However, the arbitrators ordered Skandia to pay Skandia Liv £47 million in compensation for excessively high asset management fees charged by the investment management division under an agreement negotiated by the parent company the same year.
“I’m satisfied that the arbitrator agreed with Skandia Liv on the principal issues,” said Skandia Livs chairman Bo Eklöf.
“At the same time I and the rest of the board obviously had hopes that the arbitrators would offer our policy holders a higher sum. I respect the panel’s ruling, however, and can announce that part of the earlier transfer will be returned to policy holders through the compensation claim.”
Old Mutual said the payment will be largely covered by the £41 million it set aside for that purpose when it acquired Skandia in 2006.
"We are pleased with the outcome of the ruling. We can now put this behind us and continue to focus on achieving our strategic aims for the Swedish business," Old Mutual Chief Executive Julian Roberts said in a statement.