Partner Article

RBS set to float Direct Line Insurance arm

The Royal Bank of Scotland has issued its intention to float Direct Line Insurance on the stock market.

In one of the biggest launches of recent years, RBS will issue an IPO for its insurance arm after European regulators demanded that the bank relinquish control at the start of September.

RBS is under obligation to float the business after an agreement in 2009 for its receipt of State Aid.

The bank is required to dispose of Direct Line after it committed to measures under the European Commission, which mean it must now surrender control of the company.

Part-taxpayer owned RBS will make the firm into a public company, and it is estimated to be worth approximately £3bn.

At least a quarter of Direct Line’s shares will be put up in the initial public offering, and listed on the premium segment of the London Stock Exchange.

No new Direct Line Group shares will be issued in the offering, but RBS Group’s existing ordinary shares will be floated.

The insurer announced targets earlier in the month to save £100m of costs by 2014, which resulted in 900 jobs cuts across the UK.

Paul Geddes, CEO of Direct Line commented: “We look forward to being a listed company and are more committed than ever to providing customers with excellent products and service levels, whilst seeking to deliver sustainable returns for our shareholders, targeting a 15% return on tangible equity from ongoing operations.”

Bruce Van Saun, Group Finance Director of RBS, commented: Direct Line was launched more than 25 years ago as a pioneer of direct motor insurance and it has grown to become the market leader in UK personal lines insurance.

“We believe it has a strong future as a standalone insurance group continuing to serve its customers well while delivering attractive returns to investors”

This was posted in Bdaily's Members' News section by Miranda Dobson .