RBS to rebrand insurance arm Direct Line ahead of float which could propel it straight into FTSE 100

By THIS IS MONEY REPORTER
Updated: 07:41 EST, 15 February 2012

Royal Bank of Scotland's insurance arm is to be rebranded Direct Line and could leapfrog into the FTSE 100 when it is floated later this year.

European regulators have insisted RBS must sell or spin off its insurance business by the end of 2013 because the bank received a government bailout in 2008.

RBS aims to sell a minority stake through an initial public offering in the second half this year, followed by another sale in 2013, which is set to take its holding to below 50 per cent.

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Ringing the changes: Direct Line insurance business could join the FTSE 100 when it splits from RBS later this year

It will remain open to offers for the business from other insurers.  

RBS Insurance, which is Britain's biggest motor insurer, operates the Direct Line, Churchill, Privilege, and Green Flag brands, as well as broker business NIG.

It was back in the black in the first half of 2011 after rising bodily injury claims led to a £295million loss in 2010.   

'This is an important, symbolic step for the group as we move towards having a distinct identity ahead of the planned divestment from RBS Group,' said RBS insurance chief executive Paul Geddes.

Simon Willis, equity analyst at Daniel Stewart, said the insurance business was expected to carry a price tag of around £4billion.

'RBS will also rebrand its white label insurance business, which includes Sainsbury’s, as Brand Partners. RBS is being forced to sell its insurance business as part of the disposals imposed on it by the EU for receiving state aid,' he said.

Shares in RBS were 1.04p higher at 27.69p in late morning trading.

Stock trend: RBS shares have had a tough year but staged a partial recovery of late