Osmond swoops on Pearl fund

FINANCE group HHG is selling its British life assurance assets to entrepreneur Hugh Osmond's Sun Capital in a £1.025bn cash deal.

The sale was expected to be announced to the Australian Stock Exchange overnight. The businesses being handed to Osmond include the old Pearl Assurance, London Life and NPI, which have around 2m policyholders.

Osmond, 42, is worth an estimated £134m and is best known for his involvement in Pizza Express and Punch Taverns. Last year he launched an audacious bid for hotels and pubs group Six Continents.

This is his first major step into life assurance, though Sun Capital is thought to have previously tried to take over the closed life funds of Royal & SunAlliance.

HHG was formed a year ago when Australian insurer AMP hived off its British operations. Following the sale to Osmond, it will be left with Henderson Asset Management operation, which is to be renamed Henderson Global Investors and will be valued at around £500m. The price paid by Osmond represents just under 80% of the insurance division's embedded value.

HHG plans to give £875m back to shareholders and to buy out its Australian small investors. The bulk of the staff pension scheme, which had a deficit of £67m at the time of the spin-off, will transfer to Sun Capital.

Customers of the insurance businesses, whose solvency has been fragile in recent years, have seen their bonuses and policy values repeatedly cut.

The deal will be seen as a coup for HHG boss Roger Yates, who received pay and bonuses of up to £3.3m last year, plus a £1.1m demerger payment. He gets to hang on to the good bit of the business - the fund management side - and ditch the sluggish life arm which was acting as a drag on shareholder returns.

The Financial Services Authority, which is charged with protecting policyholders, oversaw the original spin-off from AMP.