Tom Broughton looks at the RBS business.

As private equity, foreign investors and insuring giants begin to run the rule over the Royal Bank of Scotland’s insurance business, its high profile brands, growth potential and distribution strategy will fall firmly under the spotlight. There is no public suggestion that these issues have anything to do with its parent’s decision to announce on Tuesday that it plans to hive off the likes of NIG, Churchill and Direct Line. And on the face of it, it appears that RBS needed to move quickly to raise substantial cash.

Two years ago, amid speculation that RBSI was up for sale, the figure being placed on the business in the city’s smoked-filled bars was closer to £7bn than today’s estimate of £5bn. And, notwithstanding the current market climate, this is perhaps not enough for the RBS board. And consider too that it plans to raise £12bn in the largest rights issue in corporate history accompanied by the imminent disposal of its Angel trains business for an additional £3bn. It just may not want to let RBSI go for a knock-down price, and what’s more it may not need to. Whether RBS is testing the market’s appetite for a deal or not, Allianz, Berkshire Hathaway, AIG and Generali, are the front runners most likely to take the group as a whole if the price is right. But it is more likely that the RBSI brands will be sold off separately when the private equity investors will surely step into the negotiating picture. However, should you listen to the speculation then it just may well be that RBS has been waiting for the right time to dispose of this business anyway. Consider that it is a company driven by profitable growth and that these specific insurance brands may be past their heyday or beginning to accept that they are being out-manoeuvred by the online aggregators. Perhaps the market conditions have just forced RBS’s hand to make a decision that it knew was imminent. At the end of last year RBSI chief executive Chris Sullivan set in place a structure to make the brands operate in a more cohesive way, rather than competing against each other. Given this backdrop, for any firm taking on these businesses, either as a whole or individually, there is a massive opportunity to reinvigorate some of the most famous brands in the market. IT…