Royal & SunAlliance still has its local life and funds management arm on the market, although MD Mike Wilkins said yesterday there’s nothing to report at this stage and anything else would be pure speculation. A number of potential buyers are still circling the assets, which once they’re sold will return the local arm of R&SA to a pure general insurer.

Frontrunner in the race to buy the RSA business is believed to be NZ insurer Tower. But latest speculation suggests that Westpac, with its bids for a slice of Norwich's action stalling, may also be interested.

Today's Australian Financial Review prices the R&SA assets at more than $600 million.

The sale is part of the global company’s bid to release more than $2.4 billion in capital this year to take advantage of rising premiums and better business on the general insurance side of the ledger. It may also have something to do with the parent’s ongoing dismal stockmarket performance, which has seen it struggling for more than a year to raise its share value and dispose of some low-performing assets.

R&SA has made a couple of unsuccessful attempts to sell its life and assets management business in the UK. But now Group Chief Executive Bob Mendelsohn has announced an arrangement which will see the company selling its UK asset management operation under a 10-year investment management agreement to Friends Ivory & Sime. The price was $740 million.

Mr Mendelsohn said the proceeds of the sale will go towards supporting the growth of R&SA’s general insurance business, as part of the company’s overall strategy to focus on core competencies of underwriting, risk and claims management.