(Adds background on Direct Line)
By Pamela Barbaglia and Anjuli Davies
LONDON, July 11 British insurer Direct Line
is in advanced talks with several industry players to
sell its operations in Germany and Italy, two sources close to
the deal said.
At least four suitors have submitted non-binding bids for
both of the units, which sell motor insurance through the Direct
Line brand, said one of the sources who cannot be named because
the talks are private.
The combined value of Direct Line's German and Italian
business stands at around $500 million, said the second source.
Goldman Sachs has been hired as an adviser to Direct
Line. The sale will involve another round of binding bids before
a final buyer is selected in late September, the sources said.
Direct Line, which has a market capitalisation of 4.13
billion pounds ($7.03 billion), was not available for immediate
comment. Goldman Sachs declined to comment.
Deal activity in the insurance sector has ramped up this
year, helped by the stock market listing of Dutch insurer NN
Group, Europe's biggest initial public offering (IPO)
A sale of its Italian and German businesses would leave
Direct Line with a presence only in Britain.
The company, whose brands also include Churchill, Privilege
and the Green Flag roadside recovery service, was spun off from
Royal Bank of Scotland in an IPO last year.
The company gets more than 40 percent of its revenue from
motor insurance and about 25 percent from home insurance. It
also offers travel and pet cover.
Direct Line, which has been active in Germany and Italy for
more than 10 years, increased its overall annual group pretax
profit to 424 million pounds in 2013 from 249 million pounds in
($1 = 0.5877 British pounds)
(Additional reporting by Freya Berry; Editing by Pravin Char)