Perth-based Insured Group – formerly Australian Consolidated Insurance Ltd – is selling its Classic Cover Insurance and Tasman Insurance Consultants businesses to New Zealand’s fourth-largest brokerage Rothbury Group.

The sale comes as NZ Stock Exchange-listed Insured Group works on reducing its debt levels, according to a notice filed with the exchange. Details of the debt reduction are not revealed in the announcement.

But according to the notice, the sale of the businesses is expected to reduce the debt levels by about $NZ1.88 million ($1.47 million), subject to shareholder and creditor approval.

Insured Group MD Wayne Miller refused to speak to insuranceNEWS.com.au about the deal, and Rothbury Group MD Roger Abel was overseas and could not be contacted.

Earlier this year the company looked to raise $NZ10 million ($7.86 million) through a rights issue and has said this remains an option for reducing debt levels.

At the time it also flagged the possibility of using trade sales to meet debt payments, which have been extended beyond their April 1 deadline.

Insured Group has ruled out further sales of its subsidiaries to help pay off debt, the stock exchange statement said.

The sale of the two companies to Rothbury will include outstanding liabilities, although at this stage it is not known how much this will be.

While Tasman Insurance Consultants is a long established business, Insured Group only bought Classic Car Cover in June last year.

Insured Group acquired the shell of collapsed financial services company Lombard group in April. Lombard had reported an after-tax loss of $NZ295,000 ($232,000) for the year ending March 31. This compared to a loss of $NZ19.291 million ($15.16 million) in the previous year.

Revenue fell from $NZ1.7 million ($1.3 million) in the 2009 financial year to $NZ686,000 ($539,000) in the year ending March 31.

Insured Group’s share price closed on Friday at NZ0.001cents (0.0007 cents).