The Hibernian Group has found a buyer for its British insurance business and expects to realise at least £37 million from the sale.

The group has reached agreement to sell the loss-making Hibernian Insurance UK to the Swedish company, National Insurance and Guarantee Corporation (NIG Skandia), pending due diligence and regulatory approval.

The UK business is worth £34.3 million on Hibernian's books, so they will make a gain of £2.7 million at least on the sale. The difference between the two prices is accounted for by goodwill.

Hibernian says it may net more than £37 million from the sale, as the net asset value of the UK business may be higher when the deal is finally completed.

"The UK insurance market has been very strong during July, so there may be a bit more upside in the purchase price," said the finance director, Mr Cecil Hayes.

The sale is "clean", with no underwriting of NIG Skandia's reserves, which often happens when insurance companies are acquired, said Mr Hayes. There are 160 people employed by Hibernian Insurance UK.

The company, he said, has achieved its objectives in that it will realise a gain on the sale. He added that Hibernian did not have sufficient scale to make a success of its UK business.

On Monday the company announced a loss of £100,000 for the UK business which has been hit by several large flooding claims from UK customers.

He added that £37 million in cash will improve the company's ability to make a large acquisition in the Republic. It has declared that it will expand either by acquisition or by investing in its distribution network.

The British insurance regulator can take up to 90 days to approve this type of deal, but both companies are confident the sale will be completed by the middle of September.

NIG Skandia is a wholly-owned subsidiary of Skandia, the Swedish financial services group which has £36 billion sterling of assets.

NIG Skandia has premium income of £350 million sterling and the book of business it is buying from Hibernian is similar to its own. "We are confident that the combination of both companies will be in the long term interest of our UK customers and staff," said the chief executive, Mr Adrian Daly.