UK chief says sale of Hastings and Advantage assets to be concluded by end of year.
IAG UK chief Neil Utley has said that the sale of the company’s retail assets will be completed by the end of the year, and indicated he may lead a management buy out (MBO) of parts of the business.
His comments came a week after parent company IAG announced plans to offload parts of its UK portfolio comprising Equity Insurance’s broking arm, Hastings, Open & Direct and underwriting agency, Advantage.
Utley, who in 2005 led a £430m buy-out of Cox – which later became Equity – would not rule out involvement in another MBO. He said: “My duty is to IAG and its shareholders. But I am going to be completely flexible.
“There is obviously an element of sadness about what has happened, but the strategy [IAG] has adopted is right.”
“My duty is to IAG and its shareholders. But I am going to be completely flexible.
It is understood that Utley could be lining up a bid with the help of former Venture Capitalist partners Englefield and Duke Street, which took a combined stake of 80% in Cox in 2005 as part of a three to five year investment plan, but exited just 18 months later when IAG acquired the company for £570m.
Utley confirmed that informal approaches had been made from both trade and private equity sources, for parts and the whole of the UK retail portfolio.
He would not be drawn on whether the company would recoup the £140m it paid for Hastings and Advantage in October 2006. He said: “We’re confident that we’ve had enough interest to make sure we get best value for shareholders. A number of parties came to us and said ‘if you have an interest in selling, we would be interested in buying.’”
Last week, IAG chief executive Michael Wilkins said there were more natural owners for IAG’s UK retail division, and hinted at the involvement of larger market players. Another possibility could be a joint-bid from a consortium.
“A number of parties came to us and said Ã¢â‚¬Ëœif you have an interest in selling, we would be interested in buying'.
IAG’s UK broking operations control over £400m in premiums. Equity Insurance Brokers has 94 branches in the UK.
The group has integrated its UK portfolio, which could also make the business more difficult to split.
“As a package, the businesses work together,” Utley added.
He said that there would not be further redundancies at Hastings, after 300 staff were axed last week.
On 9th July, IAG revealed an expected loss of A$282m (£136.7m) driven by a $A350 (£169.7m) writedown of its UK book, which accounts for a sixth of its total business. It files its full accounts next month.