It looks likely that RBS will not be selling its insurance division after all, following the exit of forerunner Zurich two weeks ago.
That leaves Us insurance group Allstate in the running and last month they appointed Lehman Bros to advise on a potential bid. But experts are predicting that the American company will be unwilling to match the RBS asking price of £7bn and are also questioning whether Allstate have the willingness to develop internationally, particularly having sold their overseas interests to RBS in 2001.
Interestingly the share price of Allstate has risen by 2% since Zurich pulled out of the auction, while Zurich have risen by 11% in the same period.
RBS Chairman Fred Goodwin has said on numerous occasions that the bank would not be forced into a sale of it’s insurance business if the price was not right. It is considered to be one of the company’s most important and cash generative assets, with profits of £683million last year.
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