June 22 (Bloomberg) -- Royal & Sun Alliance Insurance Group Plc, the U.K.'s second-biggest insurer, agreed to sell its 20 percent stake in the company that controls the U.K. arm of the Rothschild investment bank for $185 million.

The insurer is selling the stake in Rothschilds Continuation Holdings AG to Jardine Strategic Holdings Ltd., a Hong Kong-based investment company, Royal & Sun said in a statement today. It will book a 60 million-pound ($110 million) gain from the sale.

Royal & Sun's ties with Rothschild date back to 1824, when Nathan Mayer Rothschild, founder of the U.K. investment banking arm NM Rothschild, helped found a predecessor firm to the London-based insurer. Royal & Sun, which bought the Rothschild stake in 1980, is selling businesses not tied to insurance to boost returns.

``Royal & Sun has been closely aligned with the Rothschild Group since my ancestors sponsored one of its predecessor businesses in the 19th century,'' David de Rothschild, chairman of Rothschilds Continuation Holdings, said in a statement. ``I appreciate that today its policy is to focus on general insurance and that it wishes to dispose of non-core investments.''

Jardine is investing in Rothschild for ``the long-term'' and plans to help the company grow in Asia through its ``knowledge and network of relationships'' in the region, the company said in the statement to the Singapore stock exchange.

Rothschild ranked 16th among takeover advisers in Asia last year, working on $18.2 billion of announced transactions. On Feb. 15, Rothschild formed an alliance with Tokyo-based Nomura Holdings Inc., Japan's No. 1 securities firm, to win more advisory business.

Opium Trade

``Jardine Strategic's investment in RCH is in line with its policy of taking significant stakes in multinational businesses, and supporting their development,'' the company said.

The publicly-listed holding company has stakes in Dairy Farm International Holdings Ltd., real estate developer Hongkong Land Holdings Ltd., hotelier Mandarin Oriental International Ltd. and Jardine Cycle & Carriage Ltd., which sells cars.

It was set up by Jardine Matheson Holdings Ltd., an investment company controlled by Scotland's Keswick family. Jardine Matheson was started in the 1830s, when founders William Jardine and James Matheson built their fortune running the opium trade to China. The trade led to an 1842 war with China that gave Britain control of Hong Kong.

Rothschild is looking forward to ``building a long and successful relationship'' with Jardine, David de Rothschild said.

Rothschilds Continuation, based in Zug, Switzerland, is a closely held company that controls Rothschild interests in North America, Australia and the U.K. The transaction is subject to regulatory consent, according to the statements.

Shares of Jardine Strategic, which are listed in Singapore, were unchanged at $10.50 as of the 12:30 p.m. midday trading break. The stock has risen 28 percent this year, compared with a 6.7 percent advance in the benchmark Straits Times Index.

To contact the reporter on this story: Chan Sue Ling in Singapore slchan@bloomberg.net

Last Updated: June 22, 2005 02:58 EDT