Hanover sells Lloyd’s unit to China Re

(Reuters) – Hanover Insurance Group Inc. on Thursday announced it would sell its Lloyd’s of London Chaucer Group to China Reinsurance Group Corp. for $950 million to focus on expanding its domestic business.

China Re will fund the deal to buy Chaucer with $865 million in cash and $85 million in dividends from the unit.

“This transaction will enable us to build on the growing momentum in our domestic property and casualty businesses,” said Hanover CEO John Roche in a statement.

The Worcester, Massachusetts-based insurer plans to expand capabilities in commercial businesses as well as improve penetration in the personal lines and small commercial sectors, Mr. Roche added.

Hanover bought Chaucer in 2011 but in March this year said it was reviewing its strategic alternatives.

The cash part of the deal consists of initial consideration of $820 million payable at closing and $45 million to be held in an escrow account, which may be adjusted if catastrophe losses incurred in 2018 go beyond certain threshold.

The transaction is expected to close late this year or in the first quarter of next year, subject to regulatory approvals.

Hanover’s financial advisor was Goldman Sachs & Co LLC.