Direct Line Expands
Royal Bank of Scotland Group PLC
20 June 2001
THE ROYAL BANK OF SCOTLAND GROUP'S DIRECT LINE INSURANCE TO BUY EUROPEAN MOTOR
INSURANCE OPERATION
London, Berlin, Milan - The Royal Bank of Scotland's insurance subsidiary
Direct Line, is to buy the European motor insurance businesses of AllState for
an undisclosed amount. The businesses operate out of Germany and Italy, which
are two of the largest private car markets in Europe.
Allstate started operating from a Berlin call centre in Germany in January
1997 and has 117,000 motor insurance policies, while the Italian business
started in April 2000 from Milan and has 27,000 policies.
The Direct Line name and red phone will be transplanted into each country,
along with the call centre strategy, which turned the UK market on its head in
1985. Germany and Italy extend Direct Line's European portfolio where it has
already proven the direct insurance model can work with Linea Directa, which
launched in 1995 and has become Spain's largest direct telephone motor
insurer, growing profitably to well over 300,000 policies.
Europe has several of the world's largest motor insurance markets. The number
of private motor cars in Germany and Italy are 37 million and 32 million
respectively, compared to the UK's 25 million, with total motor premiums at
Euro19.9bn for Germany, Euro15.9bn for Italy and Euro14.6bn for the UK. Spain
has 16 million private cars and Euro 6.6bn total motor premiums.
Fred Goodwin, Group Chief Executive of The Royal Bank of Scotland Group said:
'Direct Line's success in the UK and in Spain in becoming the leading direct
motor insurer demonstrates proven experience for building market share. The
Direct Line model and strong brand will shake up the German and Italian motor
insurance markets, which are dominated by traditional players, generally with
high expense ratios, which use agents who receive commission. This acquisition
gives us a head start in new markets, using an established direct insurance
operation.'
Edward M. Liddy, Chairman, President and CEO of The Allstate Corporation said:
'Our decision to sell these two companies is strictly a strategic one. While
we believe the German and Italian insurance markets represent excellent
business opportunities in automobile insurance, Allstate's best opportunities
are closer to home. We are extremely proud of our employees in the two
countries and with the success they had in launching the local operations.
However, the expansion of our property and casualty business into new
distribution channels, and the wide range of financial products and services
we are now offering, both have enormous potential in North America. That is
where we intend to focus our efforts.'
Contact:
Chris Wermann, Deputy Director, The Royal Bank of Scotland Group. 020 7920 5178
Miles Russell, Head of Corporate Affairs. Direct Line. 020 8256 2367
Barbara Panzeri, Marketing Director, Allstate, Italy 00 39 02 21725217
Gabriel Fetzberger, Marketing Director, Allstate Germany 00 49 3328 449 350
20 June 2001
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