RBSI rebrands, taking Direct Line moniker

RBS Insurance Group (RBSI) has changed its name to Direct Line Insurance Group and converted to a public limited company from a private entity, Companies House filings reveal.

The move is a strong signal that RBSI intends to split from The Royal Bank of Scotland (RBS) through a flotation rather than a trade sale in the second half of 2012.
But it does not rule out a trade sale, as RBSI is pursuing a two-track separation strategy and keeping its options open.

RBSI declined to comment on the filing.

But the filing confirms that the group will take the name of what is probably its best-known brand, Direct Line. RBSI also owns direct personal lines household names Churchill and Privilege, as well as broker-only commercial underwriter NIG.

RBS has to divest the majority of RBSI by the end of 2013 and the entirety of the insurance group by the end of 2014 as part of the conditions of its bail-out by the UK government amid the financial crisis in 2008.

While RBSI has said it is keeping its options open, a flotation has long been viewed as the most likely form of separation from its former parent. Observers are sceptical that a suitable trade buyer could be found given the scale of RBSI – the UK’s largest personal lines insurer – and the current economic environment.

If it lists on the stock exchange, RBSI will float a minority of the business in the second half of 2012, and would follow this up with a secondary listing in 2013.

RBSI has taken a number of steps to separate itself from its parent in recent months. In November, for example, it hired former Brit investor relations head Neil Manser to run its standalone investor relations function.

RBSI made an operating profit of £329m for the first nine months of 2011 and reported a return on equity of 10%. This followed a £295m loss for the full 2010 year. RBSI told analysts last year that a sensible return on equity to expect from the company as a standalone entity would be in the mid-teens.