Insurance Australia Group Ltd (IAG) has put three of its UK businesses up for sale two years after entering the UK market. Lexicon Partners are acting as advisors for the sale.
IAG, the home and car insurer, intends to keep Equity Red Star, its profitable UK specialist motor underwriter, and sell UK Hastings Insurance, Advantage Insurance and the broking arm of Equity Insurance.
Former CEO Michael Hawker, bought Hastings Direct, a car insurance broker, and sister company Advantage in October 2006 for £140m. Hawker then purchased a rival bidder for Hastings and Advantage, Equity Insurance Group, for £570m.
The group has spent about £820m since 2006 on expanding in the UK, but the move has been a disaster and has failed to deliver expected returns.
Mr Wilkins, the new chief executive, believes that A$130m in annual cost savings can be generated by withdrawing from the UK and by making the Australian business more efficient. At the same time 600 jobs will be cut in Australia.
Wilkins is under pressure from the Australian insurer's shareholders to raise the company's market value after Hawker and the board rejected three takeover proposals from QBE, which offered as much as A$8.7 billion for the company.
