First round of bidding ends today.
Italian insurer Generali has abandoned its bid for the RBS insurance arm (RBSI), according to reports.
The Financial Times said the insurer, having announced it was running the rule over the business last week, pulled out of the race on the eve of today's deadline for the first round of bids.
The newspaper said Generali decided not to pursue the assets because of what it perceived as RBS’s high price expectations, according to people familiar with the situation. Earlier this year Generali, the fourth largest insurer in Europe, earmarked £4bn for acquisitions in Europe. It is understood, however, that company is more keen developing its presence in markets outside the UK.
According to Reuters, the Italian insurer this morning confirmed the reports. A spokeswoman said: "Generali confirms it is withdrawing from the sale process."
Around six insurers are expected to table offers today for RBSI, which includes brands Direct Line and Churchill. The bank hopes to raise up to £8bn from the sale, but analysts have said that it is unlikely the sale price of the business will exceed £5bn. RBS has repeatedly stated that holding onto the business is a plausible outcome, given that it might be able to raise its desired £4bn in tier 1 capital from a sale of other assets, including Angel Trains.
Generali's exit makes Zurich the overwhelming favourite to land the business, with reports suggesting uncertainty on the part of Allianz, and AIG's ongoing problems deriving from the credit crunch. China's Ping An, and US giant Allsate remain outsiders.
Last week, Warren Buffett's Berkshire Hathaway pulled out of the running, shortly after RBS decided to excluded bids from private equity firms. Given the size of the business, however, sources recently suggested that private equity could re-enter the race as part of a joint-bid with a trade buyer.
