Esure refutes rumours of planned exit and flotation

Esure has denied recent reports that it intends to float the business and insisted that the management team had chosen to remain part of the Lloyds Banking Group.

A spokesman said there were no plans to conduct an initial public offering (IPO). Chairman Peter Wood and the company’s management own a 30% stake in Esure and the remaining 70% is held by Halifax Bank of Scotland’s insurance and investment division, now part of Lloyds Banking Group.

The spokesman added that, should management decide to float, there was an exit strategy in place thanks to a clause drawn up when Esure became part of a joint venture with HBOS.

He said that, were a flotation be decided on, a price would be derived for the company, and Lloyds and HBOS would have first call to accept that price. Esure could then become a wholly owned subsidiary or be floated.

“There has always been a clause in the contract that an exit can occur if he [Peter Wood] chose to call for that valuation, and that was then either taken up by HBOS/Lloyds Banking Group or alternatively put in for an IPO,” the spokesman explained. “It’s been there since 2000 when Peter Wood and HBOS looked at what would happen at the end of the relationship. But it doesn’t have to end. ”

Earlier this month, Lloyds reported a £4bn loss in the first half of 2009. It said this was as a result of a £13.4bn bad-debt loss brought over from HBOS, when it rescued the bank last year. The group is 43% owned by UK taxpayers.