IAG will lose on UK asset sales
IAG will probably take a hefty loss when it sells many of its UK insurance assets, according to the London online newsletter Insurance Times. The group has paid as much as $1.8 billion over the past two years to build its UK operations.
CEO Mike Wilkins announced last week that private motor broker Hastings and motor specialist Advantage Insurance – for which IAG paid £140 million ($288 million) in September 2006 – are among the assets to be shed. Others are Equity Insurance Brokers and Lloyd’s underwriting businesses Alba and Diagonal.
Mr Wilkins told last week’s meeting with investment analysts that IAG will seek buyers “who can derive greater value from the personal lines distribution assets”.
But the Insurance Times says Hastings/Advantage “will not fetch anything like the £160 million [sic] IAG paid for it less than two years ago”.
It says the move to close down two of the group’s five UK call centres, leading to 300 redundancies, “will suggest to potential buyers that the business is at least attempting to become fit for profitable purpose”.
Under Mr Wilkins’ plan IAG UK will become a specialist motor underwriter and wholesale distribution business under the Equity banner, with recently acquired SME broker Barnett & Barnett (bought in March for an undisclosed sum) also being retained.
UK industry sources suggest Equity’s thriving broker network – it has bought 36 brokerages in the past two years, the most recent last week, and now has nearly 100 branches and 900 employees – will be easy enough to dispose of in a sellers’ market.
The Hastings/Advantage operations could be sold through a management buyout, with the Insurance Times suggesting UK CEO Neil Utley – who built up Equity and sold it to IAG in December 2006 for $1.4 billion – would be one possible buyer.
CEO Mike Wilkins announced last week that private motor broker Hastings and motor specialist Advantage Insurance – for which IAG paid £140 million ($288 million) in September 2006 – are among the assets to be shed. Others are Equity Insurance Brokers and Lloyd’s underwriting businesses Alba and Diagonal.
Mr Wilkins told last week’s meeting with investment analysts that IAG will seek buyers “who can derive greater value from the personal lines distribution assets”.
But the Insurance Times says Hastings/Advantage “will not fetch anything like the £160 million [sic] IAG paid for it less than two years ago”.
It says the move to close down two of the group’s five UK call centres, leading to 300 redundancies, “will suggest to potential buyers that the business is at least attempting to become fit for profitable purpose”.
Under Mr Wilkins’ plan IAG UK will become a specialist motor underwriter and wholesale distribution business under the Equity banner, with recently acquired SME broker Barnett & Barnett (bought in March for an undisclosed sum) also being retained.
UK industry sources suggest Equity’s thriving broker network – it has bought 36 brokerages in the past two years, the most recent last week, and now has nearly 100 branches and 900 employees – will be easy enough to dispose of in a sellers’ market.
The Hastings/Advantage operations could be sold through a management buyout, with the Insurance Times suggesting UK CEO Neil Utley – who built up Equity and sold it to IAG in December 2006 for $1.4 billion – would be one possible buyer.