Royal Bank of Scotland set to float Direct Line Group insurance arm

 

Taxpayer-backed Royal Bank of Scotland is set to launch the flotation of its Direct Line Group insurance arm within weeks after ending sale talks with private equity buyers, it was reported today.

The bank has been in talks with firms including Blackstone, Bain Capital and KKR about a private sale of Direct Line, which also includes Churchill and Green Flag, but has told them it will forge ahead with a stock market listing, according to the Sunday Telegraph.

RBS, which is 82% owned by the Government following its £45 billion bailout, believes a public listing is the best option despite continuing turbulence in equity markets, a source told the newspaper, with a prospectus slated for publication late next month.

It has said that a flotation was its preferred option for the business but many thought the tough economic climate would scupper its plans, as there have been few listings in recent months.

Private equity firms have been waiting in the wings to pounce on the business, attracted by its strong cash flows and market leading position.

Bidders were expected to pay between £3 billion and £4 billion for Direct Line - nearly all of it in cash because insurance regulators do not allow buyouts funded with large sums of debt.

RBS is required to sell the business, which also includes the Privilege brand and broker business NIG, by the end of 2014 in return for its taxpayer bailout. It has already agreed the sale of more than 300 UK branches and its 51% stake in RBS Sempra Commodities.

The bank said earlier this year it would list the insurance arm in three separate tranches - one this year, one in 2013 and the remainder in 2014 - to maximise returns for shareholders. The business could be worth up to £5 billion, according to recent reports.

Direct Line recently revealed a rise in quarterly profits despite worse-than-forecast weather claims worth £40 million.

The division, which has its headquarters in Bromley, south east London, and has operations in the UK, Germany and Italy, said the wettest April-to-June period since records began in 1910 was behind the surge in home claims in the three months to June 30.

But despite the unprecedented level of claims, the group revealed a 6% rise in operating profits to £219 million and increased the number of its in-force policies by 2% to 20.1 million.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA celebration of British elections
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Editor-in-chief - Financial Services - City, London

£60000 - £70000 per annum + benefits : Ashdown Group: A highly successful, glo...

Ashdown Group: Junior Application Support Analyst - Fluent German Speaker

£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...

Guru Careers: Management Accountant

£27 - 35k + Bonus + Benefits: Guru Careers: A Management Accountant is needed ...

Guru Careers: Project Manager / Business Analyst

£40-50k + Benefits.: Guru Careers: A Project Manager / Business Analyst is nee...

Day In a Page

General Election 2015: ‘We will not sit down with Nicola Sturgeon’, says Ed Balls

'We will not sit down with Nicola Sturgeon'

In an exclusive interview, Ed Balls says he won't negotiate his first Budget with SNP MPs - even if Labour need their votes to secure its passage
VE Day 70th anniversary: How ordinary Britons celebrated the end of war in Europe

How ordinary Britons celebrated VE Day

Our perception of VE Day usually involves crowds of giddy Britons casting off the shackles of war with gay abandon. The truth was more nuanced
They came in with William Caxton's printing press, but typefaces still matter in the digital age

Typefaces still matter in the digital age

A new typeface once took years to create, now thousands are available at the click of a drop-down menu. So why do most of us still rely on the old classics, asks Meg Carter?
Discovery of 'missing link' between the two main life-forms on Earth could explain evolution of animals, say scientists

'Missing link' between Earth's two life-forms found

New microbial species tells us something about our dark past, say scientists
Ronald McDonald the muse? Why Banksy, Ron English and Keith Coventry are lovin' Maccy D's

Ronald McDonald the muse

A new wave of artists is taking inspiration from the fast food chain
13 best picnic blankets

13 best picnic blankets

Dine al fresco without the grass stains and damp bottoms with something from our pick of picnic rugs
General Election 2015: Ed Miliband's unlikely journey from hapless geek to heart-throb

Miliband's unlikely journey from hapless geek to heart-throb

He was meant to be Labour's biggest handicap - but has become almost an asset
General Election 2015: A guide to the smaller parties, from the the National Health Action Party to the Church of the Militant Elvis Party

On the margins

From Militant Elvis to Women's Equality: a guide to the underdogs standing in the election
Amr Darrag: Ex-Muslim Brotherhood minister in exile still believes Egypt's military regime can be replaced with 'moderate' Islamic rule

'This is the battle of young Egypt for the future of our country'

Ex-Muslim Brotherhood minister Amr Darrag still believes the opposition can rid Egypt of its military regime and replace it with 'moderate' Islamic rule, he tells Robert Fisk
Why patients must rely less on doctors: Improving our own health is the 'blockbuster drug of the century'

Why patients must rely less on doctors

Improving our own health is the 'blockbuster drug of the century'
Sarah Lucas is the perfect artist to represent Britain at the Venice Biennale

Flesh in Venice

Sarah Lucas has filled the British pavilion at the Venice Biennale with slinky cats and casts of her female friends' private parts. It makes you proud to be a woman, says Karen Wright
11 best anti-ageing day creams

11 best anti-ageing day creams

Slow down the ageing process with one of these high-performance, hardworking anti-agers
Juventus 2 Real Madrid 1: Five things we learnt, including Iker Casillas is past it and Carlos Tevez remains effective

Juventus vs Real Madrid

Five things we learnt from the Italian's Champions League first leg win over the Spanish giants
Ashes 2015: Test series looks a lost cause for England... whoever takes over as ECB director of cricket

Ashes series looks a lost cause for England...

Whoever takes over as ECB director of cricket, says Stephen Brenkley
Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

Fishing is on Nigel Farage's mind

Ukip leader casts a line to the disaffected