The much troubled Co-op Group could be set to sell its insurance arm to Makerstudy.
Valued at roughly £300m ($391m), the Co-op insurance sale is in advanced talks, but nothing has been decided.
Makerstudy Group, a privately owned company, already owns 5% of the UK’s motor insurance policies.
GSO, the credit arm of Blackstone, are one of the parties approached to help Makerstudy fund the acquisition.
Co-op insurance sale
According to Sky News, the Co-op insurance sale has been touted since the summer. Aviva, AA, RSA Insurance, and also Saga, had all previously shown interest.
Following the possible sale, the Co-op Group would restructure its entire UK insurance market presence.
If a deal falls through, the Co-op could look at a reinsurance trade as another strategy.
The sale of the insurance arm, which made £11m in underlying profit in 2017, is being viewed sensitively. This is due to the 1000 people that work in the insurance division.
According to sources, any sale, despite possible significant redundancies, would not lead to the Co-op exiting the UK insurance market, however.
However, Co-op had put its insurance section up for sale as recently as 2013. That move followed the discovery of a whopping £1.5bn in its balance sheet.
Co-op troubles continue
Co-op group has has its fair share of rough times in the past five years. It’s banking arm in 2017 reduced headcount by 20% but still garnered a loss of £140.3m.
The Co-op Bank, in which the Co-operative Group still has a 20% stake, was rescued from the brink of collapse by a group of hedge funds in 2013.
For six years, it has reported losses, although the £477m deficit for 2016 was an improvement on the £610m loss recorded in 2015 and it reduced to £140.3m in 2017.
The Co-op Bank has four million customers and is well known for its ethical standpoint. The lender said that the rescue plan would enable it to continue as a stand-alone entity and “safeguard the Bank’s values and ethics”.