RBS is looking for viable ways to dispose its car and home insurance business in the UK, which may fetch 7bn pounds.
The partly government owned bank abandoned the disposal of the underwriting firm through bid approaches from trade buyers and private equity firms, which it considered too low, made at the zenith of financial crisis, as reported by the Financial Times.
RBS, four and a half later, has put the underwriting business for sale, as the European regulators have ordered RBS to relinquish control of Direct Line by the end of next year and strip its whole stake by the end of 2014.
One of 30 shareholders in RBS told Financial Times, "They want to get this through the door because they have to sell it, but Direct Line is not something that immediately captures the imagination as a company to have on your books."
The industry expert believes that the RBS price tag of 7bn pounds will hardly attract investors, as the UK motor insurance market is saturated and highly competitive.
Direct Line's combined operating ratio, which includes claims cost, commission and expenses as a percentage of its premium income, touched at 101.1% during the first half and is still loss making.
Direct Line received 145.4m pounds from its investments in the first half and 99m pounds from "other" sources, including 11m pounds from solicitors' referral fees.
