Struggling Direct Line and Churchill insurance owners look for rescue package

The insurance arm of Royal Bank of Scotland (RBS), the struggling parent company of top UK insurance brands Direct Line and Churchill, is subject to an advanced bid valued in excess of £3 billion. If successful private-equity group CVC and Swiss Re, the world’s largest reinsurance group would take a 51% stake in the business, according to The Times.

This could affect as much as half the population as, with 26 million policies, RBS Insurance is the second-largest general insurer in Britain, the largest motor insurer and the second-largest home, travel and pet insurer.

Like most other banks RBS has been hit hard by the credit crunch, and recently lost chief executive Fred Goodwin who resigned after the bank was forced to sign up to a rescue deal likely to make the British government its controlling shareholder in the short term.