Australian insurer will be hit by $240m net loss after tax from United Kingdom sale, Insurancetimes.co.uk reported on Friday
IAG has agreed deals to sell its UK operations, offloading Equity Red Star to Aquiline Capital Partners and brokers Barnett & Barnett and NBJ to a management buy-out.
Private equity firm Aquiline has bought Equity for £87m. The sale is subject to regulatory approval and is expected to complete in the second half of IAG's financial year ending 30 June 2013. The Australian insurer said in a statement that, as part of the sale agreement, the existing pension fund liabilities will remain with IAG.
IAG has also agreed an exclusive arrangement to sell specialist commercial broking business Independent Commercial Brokers, which includes Barnett & Barnett and NBJ, to a consortium led by the existing management team. "A further announcement will be made in relation to ICB in due course," said the statement.
IAG managing director and chief executive, Mike Wilkins, said all options for the UK business had been investigated, including continuing to focus on improving the business' performance within the current operating model and refining the business' strategy to a more focused specialist motor offering.
He said, "We believe the sale option delivers the best available outcome for IAG shareholders, particularly in light of the continuing challenging economic and industry conditions in the UK market.
"It also allows us to concentrate on our strategic priorities of accelerating profitable growth in our home territories of Australia and New Zealand, which in the 2012 financial year represented over 90 per cent of the group's gross written premium, and on increasing our Asian footprint.
