The Accident Group has sold its subsidiary, pre-event legal expenses firm Motor Law, for an undisclosed sum.
Motor Law has been bought by Norfolk-based Colgate Accident Assistance, which will take over the company's 800,000 policies and network of 800 brokers.
Most of Motor Law's employees have been absorbed by its parent, the Accident Group, and half a dozen have moved to Colgate. The Accident Group said there could be a small number of voluntary redundancies.
A spokewoman for the Accident Group said: "We decided to sell Motor Law in order to focus more on after the event (ATE) insurance, in which we are a market leader.
"We do not have plans for the sale of any other subsidiaries."
Colgate chief executive Nick George said: "We have strategic plans for growth in the Colgate Group and, being an accident management and credit hire business in our own right, the Motor Law fitted well into our portfolio of business."
NIG will continue to underwrite former Motor Law policies for the time being, although the Accident Group has spoken to other underwriters about taking over the book.
An Equity Red Star spokeswoman said: "We are considering taking on the business, but we are still in negotiations."
Manchester-based Motor Law, started in 1993, claimed to be the third-largest in the UK market. Neither Colgate nor the Accident Group would specify Motor Law's turnover for 2000, although the figures are an increase on those in 1998, with annual turnover of around £4m and profits of almost £900,000.
Last June, Motor Law chairman Mark Langford was convicted for careless driving after his Ferrari sports car struck and fatally injured a 73-year-old pensioner. He was subsequently fined £1,000 and ordered to pay £500 costs.
Langford also had directorships of several other companies, including the Accident Advice Bureau, Accident Investigations, Orion Car Rental and the Accident Group.
Colgate Accident Assistance was started up in 1982 as a credit hire business and went into accident management. It currently employs 160 staff in the UK and Ireland, and owns a subsidiary, specialist motorcycle brokerage Lexham Insurance, which has an annual policy income of more than £10m.
Colgate is planning further business expansion in 2002 and is in talks with "two major retailers" to sign insurance contracts which will give it access to a customer base of seven million.