LONDON Dec 14 Australian insurer IAG
is to book a net loss of A$240 million ($253 million) on the
sale of its British operations, including its Equity Red Star
IAG, which will focus on its domestic market and expanding
in Asia, is selling Equity Red Star for 87 million pounds ($140
million) to private equity firm Aquiline Partners, it said.
Its other British business, Independent Commercial Brokers,
is being sold to management for an undisclosed sum.
Equity Red Star, which covers one in four motorcycles on
British roads, made an A$358 million loss in 2010 after failing
to set enough cash aside to cover claims.
The business was reprimanded by Lloyd's of London
and charged 95,000 pounds in investigation costs in January for
not having big enough buffers to cover a surge in personal
The British motor insurance industry, weighed by rising
claims and competitive pricing pressure, has not made a
collective underwriting profit since 1994, according to the
Association of British Insurers.
"We believe the sale option delivers the best available
outcome for IAG shareholders, particularly in light of the
continuing challenging economic and industry conditions in the
UK market," IAG chief executive Mike Wilkins said.