Insurance Australia Group (IAG) has sold its UK insurance business following the completion of a strategic review process, in an effort to boost profits at home and also expand its foot print in the Asian market.
The sale includes Equity Red Star (ERS) business to Aquiline Capital Partners for £87m ($130m), and IAG’s UK commercial broking business Independent Commercial Brokers (ICB), including Barnett & Barnett and NBJ, which has been acquired by the existing management team for £10m ($15m).
Subject to regulatory approval, the first sale, which retains the existing pension fund liabilities with IAG, is expected to complete in the second half of the company’s financial year that ends on 30 June 2013, while information regarding ICB sale has not been made public.
IAG managing director and CEO Mike Wilkins said the company had considered all options for the UK business, including improvement within the existing operating model and refining the business’ strategy to a more focused specialist motor offering prior to moving ahead with the sale.
”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,” Wilkins added.
The company is expecting a total net loss of $240m after tax on sale of the UK operations.