Speculation that Equity Red Star and subsidiary Barnett and Barnett are up for sale have been dismissed by sources close to parent Insurance Australia Group (IAG).
A newspaper report suggested that IAG could sell motor insurer Equity and broking arm Barnett after a troubled year for its UK arm.
The Mail on Sunday said IAG planned to ‘pull out of Britain’ after Equity made a £76m loss last year and IAG had to strengthen Equity's reserves by £202m.
However, sources close to IAG dismissed the talk and said there was ‘absolutely no truth in the rumours’.
Even if IAG were to sell the business, it is questionable how much they would receive for an asset which still has a number of issues.
As well as turning its book around, Equity is currently at the centre of an FSA 166 investigation into its systems and controls following a year of heavy losses to bodily claims injuries.
The Lloyd’s insurer is also facing growing antipathy from Names who invested money in the business.
However, IAG chief executive Mike Wilkins, when questioned this year by analysts, stressed his determination to keep the company.
UK chief executive Ian Foy believes the business is heading for a ‘break even’ status within the year. IAG declined to comment.
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