CVC in talks to take stake in RBS insurance arm

by Jordan Yerman | October 16, 2008 at 06:04 am

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Buoyed by the British government, Royal Bank of Scotland has been stuck trying to sell of its insurance holdings. It may have found a buyer in CVC Capital Partners. As CVC is not the only bidder, the deal has not yet been closed.

CVC was one of three bidders on Wednesday night reported to be negotiating to buy a 51 per cent share in the bank's British insurance assets. US insurer Allstate is widely tipped to be interested as well.

Royal Bank of Scotland (RBS) declined to comment. CVC was not available for comment.

RBS, which agreed a massive capital injection by the British government earlier this week, has long been looking to sell its UK insurance assets, but a deal has been delayed by the credit crunch.

The London-based buyout firm is one of three bidders negotiating to buy a 51 percent stake in the Churchill and Direct Line insurance units, the people said, declining to be identified as details are private. No agreement has been concluded, they said. The insurance units were valued at about 5 billion pounds ($8.7 billion) before the credit crisis escalated last month.