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Insurance Australia reviews British operations, may sell them

Thursday 17th May 2012

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Insurance Australia Group said it has begun a strategic review of its British operations which may result in them being put up for sale.

“One of our key strategic priorities is to return the UK to profitability,” said Mike Wilkins, managing director of IAG, which operates under the NZI, State Insurance and now AMI brands in New Zealand.

“Given the progress towards that goal in the opening half of the current financial year, we believe the time is right to consider our longer-term plans for the business and the best way to maximise shareholder value,” Wilkins said.

The British business reported an A$5 million insurance loss for the six months ended December, down from the $121 million loss in the same six months a year earlier.

The review is appropriate given current economic conditions in Britain, Wilkins said.

The remediation program for the British business is continuing and there are “early signs of government action on necessary industry reform,” IAG said. “These include, but are not limited to, refining the business' strategy to a more focused specialist motor offering and exploring options for a potential sale of all or part of the business.”

IAG shares don't trade on the NZX but it has NZ$325 million of 25-year subordinated bonds listed here. The “A-” rated bonds, issued late last year, last sold on May 15 at $104.50 per $100 face value.

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