LONDON — Royal Bank of Scotland Group confirmed Friday that industry veteran Mike Biggs will become the chairman of its Direct Line business as the U.K. bank looks to bulk up its insurance arm ahead of a planned initial public offering later this year.
RBS Insurance, the U.K.'s largest home and motor insurer, recently rebranded itself as Direct Line Insurance Group as it plans to split off the business in the second half of 2012.
RBS, 82%-owned by the U.K. taxpayer following a bailout during the financial crisis, is selling its insurance business as part of the disposal program imposed on it by the European Union for receiving billions in government aid. The bank has already sold its U.K. branches to Spain's Banco Santander, its 51% stake in RBS Sempra Commodities and its joint venture with Sempra Energy. RBS Insurance earlier this year said it posted an operating profit for 2011 of GBP454 million ($719 million), compared with a loss of GBP295 million ($467 million) in 2010, on revenue of GBP3.8 billion ($6 billion) compared with GBP4.2 billion ($6.7 billion) in 2010.
Biggs is currently chairman of Resolution Limited, the U.K. life assurance business, a role he will retain, and has previously been chief executive and group finance director of Resolution, and group finance director of Aviva.
"The successful divestment of Direct Line Group is one of our priorities and we have confidence that Mike will help us get this done," said RBS CEO Stephen Hester in a statement. "The business has been doing well and is increasingly ready to flourish as an independent company."
The European Commission requires RBS to cede control of Direct Line Group by Dec. 31, 2013, and to sell its entire stake by Dec. 31, 2014. It hasn't ruled out selling the business to another company.
