Insurance Australia sells UK business to Aquiline Capital
Insurance Australia Group has agreed to sell its UK business – Equity Red Star – to Aquiline Capital Partners for GBP87 million ($140 million). The transaction is scheduled for completion before June 2013.
The Australian insurer expects to incur a net loss of A$240 million ($253 million) in the current financial year related to the disposal of Equity Red Star.
Mike Wilkins, the company's CEO, said that other options for the UK business had been considered, including continuing with the current strategy and switching to a more specialized, motor insurance-focused approach. It was decided that a full disposal was in the best interests of shareholders.
"It also allows us to concentrate on our strategic priorities of accelerating profitable growth in our home territories of Australia and New Zealand, which in the 2012 financial year represented over 90% of the group's gross written premium, and on increasing our Asian footprint," Wilkins said in a statement.
Insurance Australia wants Asia to represent 10% of total gross written premium on a proportional basis by 2016. It operates under the Safety and NZI brands in Thailand.
US-based Aquiline specializes in financial sector investments, particularly in risk-bearing and services enterprises across the insurance, banking, specialty finance, securities and asset management spaces. It targets assets in North America and Europe, typically committing $100-400 million.
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