Utley nets millions from sale of Equity to Australian insurer

The insurance entrepreneur Neil Utley and the private equity group Duke Street Capital cashed in a multi-million pound profit yesterday, as they sold on the UK's fifth-largest motor insurer, Equity Insurance Group, just 18 months after taking it private.

Insurance Australia Group (IAG), Australia's largest general insurer, agreed to pay £570m for the company - around £140m more than Mr Utley and his partners bought the company for last year. It is not known how big the management's stakes in the company are. However, it is believed that Mr Utley, the company's chief executive, has cleared several million pounds from the sale.

IAG has been on the lookout for acquisitions in Europe over the past few years and its acquisition of Equity appears to be well-timed, with the UK motor insurance market having begun to see a gradual increase in premiums over past few months.

Commenting on the deal, Michael Hawker, the chief executive of IAG, said: "Equity is an ideal fit with our acquisition criteria in mature markets like the UK - it's a motor-led insurance business with consistently high margins in its markets and a strong management team.

"The company has a proven ability to produce profits across the cycle, with an unbroken 37- year record of profitability, and a combined operating ratio that has outperformed the UK motor market by an average of 15 per cent over the past 25 years. It also has significant growth opportunities."

After buying Equity last year, Mr Utley cut the company's headcount, and set about securing a raft of new high-profile affinity deals. This year, the group entered into a partnership with Ryanair, agreeing to underwrite the budget airline's own-brand car insurance. Mr Utley is to stay on as chief executive, and will also join IAG's executive team.

"This is the right time for us to be initiating the next phase of Equity's strategic development," said Mr Utley. "We are delighted to be joining such a large, well- regarded and professional insurance company, which will give us access to greater resources with which to accelerate our dynamic growth strategy in the UK market."