Beneficial Will Sell Most of Its Insurance Business

Beneficial Corp. will sell most of its insurance group and its credit subsidiary in a major restructuring aimed at restoring the company’s profitability, the company said Friday.

The sale could generate about $1.4 billion, about $650 million of which would go for repayment of intercorporate advances.

Part of the net proceeds will go to reduce short- and long-term debt and to fund growth in Beneficial’s profitable consumer finance businesses, the company said. Proceeds also will go toward a repurchase of a yet undetermined amount of its common shares.

Beneficial, which announced in August that it was considering a major restructuring, has 1,100 consumer finance offices in the United States and three foreign countries. Its 1985 revenue was $2 billion.

Units being sold include Western National Life Insurance Co.; the other companies making up the Beneficial Insurance Group, including property and casualty subsidiaries, and Beneficial National Bank USA, its credit card unit.

“Selected additional segments of our businesses not related to our core consumer lending operations will also be under review for possible sale,” Beneficial Chairman Finn M. W. Caspersen said in a letter to shareholders.

“We have several interested parties,” said a spokeswoman, who refused to name them.

The letter also said the Beneficial board of directors had rejected two offers from an unidentified “major U.S. corporation” to purchase all of Beneficial’s operations except its property and casualty insurance businesses.

“Management anticipates that these steps will result in substantial growth in earnings per share for the remaining streamlined company over the next several years,” the letter said of the restructuring.

For the third quarter ended Sept. 30, Beneficial said its insurance group lost $160.4 million, a key factor in the company’s net loss of $126 million.

In the same quarter last year, Beneficial posted a profit of $20.7 million.