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The Actuary The magazine of the Institute & Faculty of Actuaries

RBS scraps sale of insurance division

RBS has withdrawn its Direct Line personal lines insurance arm from sale. The sale launched 10 months ago had hoped to attract a £6bn to £7bn price tag. New chief executive Stephen Hester, who took over from Fred Goodwin in January, declared RBS’s insurance assets as a core part of the group for the future, adding: “Given RBS’s broader considerations, it was important to test the market for this business which has demonstrated that a sale on terms currently available would destroy value for RBS’s shareholders. “

RBS Insurance benefits from a leading market position, strong cash generation and low capital requirements. It does not absorb funding or risk-weighted assets and is not closely connected to the credit cycle. It is an impressive, well-run business with great people and excellent customer franchises. It can play an important role as we return the RBS group to standalone strength.” The move marks a sea change in the embattled bank’s strategy compared to that of the previous management team.