LONDON, Dec 14 (Reuters) - 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 motor unit.
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 injury claims.
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.