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Direct Line close to separating from RBS

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by Jan Harris
Direct Line close to separating from RBS

Direct Line Insurance has revealed that its separation from Royal Bank of Scotland (RBS) is ”substantially complete”.

In an upbeat announcement the insurer said that it expects profitability to soar following the separation.

RBS is selling Direct Line under the conditions imposed by European regulators on its bailout by the UK government during the credit crunch.

Direct Line, which includes the Churchill and Privilege insurance brands, as well as the Green Flag breakdown service, is expected to be floated by the bank in an initial public offering (IPO) later this year, which could value it at £3bn.

Direct Line has reported a 7 per cent increase in operating profits for the six months to the end of June but pre-tax profits fell from £187.5m to £106.5m due to restructuring costs and other costs related to the separation from RBS.

Direct Line Group chief executive Paul Geddes said: “Other than some transitional services provided by RBS Group, we have essentially achieved the goal of operating as a standalone insurance company.”

Direct Line has also launched a new marketing strategy and is ditching its popular comedy ads starring actors Chris Addison and Alexander Armstrong.

The brand is adopting a more serious approach which will focus on its expertise and services, with a campaign designed by M&C Saatchi.

The new ads feature an army of workers dedicated to helping customers with their claims, to emphasise the size and capability of the brand.

Direct Line products are currently not available on price comparison websites, although its Churchill and Privilege brands are available through the UK’s four main comparison sites.

The group has revealed that home insurance products will be made available through price comparison sites later this year.

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News posted: September 4, 2012

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