Australian parent warned it could struggle to find buyers at book value for Lloyd’s motor underwriter

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IAG has been told that it faces a A$250m loss (£199.3m) on the sale of Equity Red Star.

And that loss is an optimistic one, as IAG could struggle to find buyers at the company’s current book valuation.

“A sale around net asset value (A$250m) would result in a A$320m non-cash writedown. However, this would not impact regulatory capital coverage,” said Kieren Chidgey, an insurance analyst at Deutsche Bank in Sydney told Financial Times. “The bigger question is whether there is a buyer at this sort of price.”

Exclusive: Rise and fall of Equity Red Star: we trace the history of the Lloyd’s motor insurer

IAG chief executive Mike Wilkins said yesterday: “‘One of our key strategic priorities is to return the UK to profitability. 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.’’

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