UK insurer up for sale

Churchill Insurance, one of Britain’s biggest car and home insurers, has been put up for sale with a £1.5 billion price tag by its owner Credit Suisse Group.

Among the potential bidders for Britain’s fifth-largest non-life insurer are understood to be Royal Bank of Scotland’s Direct Line insurance business and Lloyds TSB.

According to a report in the Sunday Times newspaper, the Swiss bank needs to raise capital to shore up its balance sheet. It has already pumped £860 million into Winterthur, its reinsurance subsidiary, and Credit Suisse First Boston, its investment bank, is under severe financial pressure.

Last year Churchill had gross written premium income of £2.1 billion and £83 million of pre-tax profits, the paper said.

Credit Suisse said last month that it planned to cut 1,250 jobs in Switzerland after posting a record loss for a European bank in 2002.

The bank has been hit by falling share prices and a raft of acquisitions it made before markets started to fall.

Churchill insures more than seven million cars and homes in Britain, both under its own brands and on behalf of a range of blue-chip partners. It employs 8,000 staff and serves three million customers.

If Direct Line’s bid is successful, it would make the combined group a formidable force in the insurance sector and would challenge the supremacy of Royal & Sun Alliance.