IAG has sold its under-performing UK assets for £73.5 million ($151 million) as the insurer completes the final step in its major corporate restructure.

But the group’s profitable specialist UK motor underwriter Equity Red Star, which contributed 71% of IAG UK gross written premium in the 2008 financial year, will be retained.

Branch network Equity Insurance Brokers will go to local insurer Swinton Group for £50 million ($103 million).

IAG has also shed broker Hastings and underwriter Advantage through a £23.5 million ($48.2 million) management buyout led by Hastings CEO Edward Fitzmaurice and Advantage CEO Keith Charlton.

IAG’s UK CEO, Neil Utley, will take a minority shareholding in the separated business and will also serve as non-executive chairman.

Announcing the sales, IAG CEO Michael Wilkins IAG said the group will take a loss of around £40 million ($82 million) in the 2009 financial year on its UK interests, together with the recent closure of Lloyd’s syndicate Alba and associated underwriter Diagonal.

IAG paid £140 million ($206 million) for Hastings/Advantage in September 2006, and has spent as much as another $1.8 billion building up the UK businesses.