Shareholders in Direct Line are in line for a £60 million windfall after the insurance group agreed to sell its closed-book life division.
Acquisition vehicle Chesnara is buying Direct Line Life (DLL) for £39.3m in cash, while Direct Line will also take a £23m dividend out of the business.
The deal is subject to approval from regulators and Chesnara shareholders, and once complete Direct Line plans to pay out a special dividend of 4p a share.
DLL made a pre-tax profit of £6.9m and its parent company, which was spun off by Royal Bank of Scotland last year, expects to make a gain of about £12m following its disposal.
The life firm, which closed to new business in July 2011, has about 150,000 policies in force.
Chesnara chief executive Graham Kettleborough said: “Adding this portfolio to our existing book of business brings extra security, from increased size and concentrated governance, to both existing and the newly-acquired policyholders.”