* To list Gocompare.com to focus on independent strategies
* Analysts value website at between 385-407 mln stg
* Co sees solvency ratio between 130-150 pct after demerger (Adds details, CEO, analyst quotes, share movement)
By Noor Zainab Hussain and Esha Vaish
Sept 13 British insurer esure Group Plc said it would list its price comparison website, Gocompare.com, on the London Stock Exchange, to create a stand-alone digital technology business.
Esure, which provides insurance to drivers and home owners across the UK, said the demerger, subject to a shareholder vote, would see each of its investors get one share in Gocompare.
“(Gocompare) had been flat lining for a few years. We have invigorated the business… the next phase for Gocompare is to deliver strong growth from a wider product range and the demerger is really about how we maximise the potential of that business,” CEO Stuart Vann told Reuters.
The demerger comes as the growth and popularity of price-comparison websites has increased competition in British motor insurance, putting pressure on prices in the past few years.
Two analysts separately valued the website at 385 million pounds and 407 million pounds respectively. Vann declined to comment on the valuation. Esure has a market value of 1.19 billion pounds, according to Thomson Reuters data.
Esure said in June that it was considering strategic options including a demerger of Gocompare.com, which it took full control of in March 2015.
Gocompare is headed by Matthew Crummack, the former boss of online leisure and travel retailer lastminute.com.
The demerger is expected to complete in the fourth quarter of this year.
Costs related to the demerger – the separation of a large company into two or more smaller organisations – are expected to be around 19 million pounds ($25 million), esure said.
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The insurer added that Gocompare would take on 75 million pounds in debt and pay esure a cash dividend of about 63 million pounds to help cover these costs.
Esure said its solvency capital ratio, under the new European capital rules for insurers that came in January 2016, would be in the region of 130-150 percent after the demerger.
Esure posted a Solvency II capital ratio of 126 percent after dividends in August. The lower the ratio, the greater the chances of a company defaulting on its obligations.
“Whilst we accept the rationale offered by esure for the demerger, such as independent strategies etc, we view this as a transaction that is driven by Solvency II considerations,” Shore Capital analyst Eamonn Flanagan wrote in a note.
Esure shares were up 2 percent at 293 pence at 0957 GMT.
($1 = 0.7510 pounds) (Reporting by Noor Zainab Hussain in Bengaluru; Editing by Sunil Nair)
