‘Rescuer’ linked to bid for Direct Line

Andy Haste is understood to be working with private equity firms Blackstone, Bain and Advent on a proposal to buy Direct Line Group, the UK’s biggest motor insurer whose other brands include Privilege and NIG.

Mr Haste is credited with saving RSA from near-collapse in 2003 after he ditched its troubled American unit, cut thousands of jobs and raised £960m in a cash-call to investors.

Direct Line is owned by Royal Bank of Scotland but, as a punishment for taking state aid, the taxpayer-backed bank must sell or float the unit by next year.

Direct Line was founded in 1985 It has four core sites in Yorkshire – three in Leeds and one in Doncaster. RBS employs around 7,000 staff in Yorkshire.

It is expected that RBS will 
sell a minority stake in the business through a shares offering later this year, followed by a further sale in 2013. Although the private equity consortium’s plans are at an early stage, the Sunday Telegraph said a successful bid of between £2.5bn and £3.5bn could see Mr Haste installed as Direct Line’s chief executive or chairman.

RBS put the unit up for sale in 2008 but struggled to find a buyer willing to meet the £7bn asking price. The figure is now considerably lower because of the economic downturn and personal injury claims blighting the industry.

And earlier this year, the Office of Fair Trading said it planned to refer the private motor insurance market to the Competition Commission after it found evidence that insurers compete in a dysfunctional way.