The Royal Bank of Scotland (RBS) is preparing to sell off or float its insurance unit, which includes familiar names such as Direct Line, Churchill, Green Flag and Privilege, and has now appointed a team of advisers to oversee the process.
The bank, which is still backed by the taxpayer after it was bailed out by the government to the tune of tens billions of pounds during the recent financial crisis, has signed up both Morgan Stanley and Goldman Sachs to undertake a strategic review of its insurance unit.
There should be some high-profile parties interested if a sale goes ahead, including Warren Buffett. RBS, which is being pressurised by regulators in Europe to dispose of its insurance arm, values the unit at around GBP 4 billion to GBP 5 billion. Although RBS attempted to sell the business in early 2008 when it started to run into difficulties.
However, it still seems most likely that there will be a flotation of the business on the London Stock Exchange, probably in two or three years time, according to sources near to the bank.
It has already got rid of a number of key assets, such as the GBP 4 billion sale of 300 branches in the UK, an 80 per cent stake in the WorldPay payment processing company and much of its holding in a commodities joint venture.
Source: Life Insurance
