The poor investor response to the IAG share offer doesn’t necessarily reflect on the likely success or failure of the Royal & SunAlliance Asia-Pacific division float, a leading Sydney analyst said yesterday.

“I don’t think we can draw a conclusion that insurance stocks aren’t popular because one million ‘mum and dad’ investors didn’t buy shares in IAG,” he said. “The R&SA float will be predominantly institutional investor-based and has to be judged on its own merits. And if you look at the initial $500 million institutional offer IAG had, they did very well.”

The IAG/CGU deal still requires regulatory approval from the ACCC. The combined group would cover 40% of the household insurance market and 47% of the motor insurance market. Sources say the parties remain confident the positive aspects of the deal will see it win approval.

Other foreign-owned companies, including the Lumley Group, are also on the market, with some deals already believed to have been made. The fate of one local operation is expected to be announced in the next week. The fall in global equities has crippled the investment returns and the market value of most European insurers. The result is proving to be a withdrawal from global markets and a return to core business. The continuing withdrawal of foreign insurers from the Australian marker will be examined in the December issue of Insurance & Risk Professional.