RBS to retain insurance business

by Gill Montia

Story link: RBS to retain insurance business

Royal Bank of Scotland (RBS) has once again gone cold on plans to sell its insurance business.

The unit, which includes the Churchill, Direct Line, Privilege and Green Flag brands, was put up for auction last year when the bank hoped to raise around £7 billion from a sale.

Zurich, US insurer Allstate, Allianz, Italy’s Generali, Berkshire Hathaway and Chinese insurer, Ping An, all showed interest but walked away as the credit crisis worsened.

Private equity group CVC Capital has also been linked to a potential bid, as have Apollo Management and BC Partners, as recently as last month.

RBS Insurance is the UK’s biggest personal lines general insurer and the UK’s leading motor insurer and the bank has been reviewing its options for the business since November.

It has been decided that the unit meets the criteria for membership of the now majority state-owned group and that a sale in today’s market would not be in the best interests of shareholders.

Meanwhile, RBS remains centre stage in the bank bail-out drama as Prime Minister Gordon Brown yesterday responded to reports that the bank is considering awarding its executives bonuses potentially worth millions of pounds.

Mr Brown has reiterated that there should be “no reward for failure” at banks that have been rescued by the taxpayer.