Allstate calls on Lehman to lead RBSI charge

See also: Zurich chief: we are best fit for RBSI

Allstate, the largest car insurer in the US, has appointed banking giants Lehman Brothers to guide its bid for RBS' insurance assets, according to reports.

The Independent said that Lehman Financial Institutions group and corporate finance house, Fenchurch Advisory – which includes former RBSI chairman, Ian Chippendale – are advising the insurer on its bid for the £7bn GWP division, which includes leading UK brands Churchill and Direct Line.

The news follows comments by rival suitor Zurich two weeks ago, with global chief James Schiro questioning the ability of Allstate to mount a bid for a business worth almost half its own market cap.

Sources have also questioned the appetite of Allstate to develop an overseas presence, with the insurer having sold its German and Italian car businesses to RBS seven years ago.

The Independent said that Zurich is thought to be preparing an all-cash offer, following reports that the insurer had secured funding from investment banks Credit Suisse and Deutsche Bank.

Citigroup, who are advising Zurich on its bid, said in recent note to investors said that the insurer should not pay any more than £5.8bn for the unit. It said that Zurich would need to raise £3bn in financing in addition to its own fund of £3bn.

Sources are becoming increasingly divided on whether RBSI will accept a bid of less than £6bn for the unit.

Travelers and Allianz remain in the running.