Lloyds Reviews Insurance Assets

According to finance industry reports, Lloyds Banking Group is currently reviewing its insurance assets, with a view to downsize.

The FTSE group is believed to have hired Deutsche Bank to conduct a review of its main insurance businesses, noting vital points such as overlap of assets due to takeovers and acquisitions.

For instance, with the takeover of HBOS last year, Lloyds inherited insurance brands such as Clerical Medical and Halifax Life Insurance - not to mention a 60 per cent stake in the wealth manager St James' Place Capital.

Already owning brands such as Scottish Widows, Lloyds has been experiencing significant overlap within the insurance portfolio of the merged business. Thus, there has been speculation that famous names such as Clerical Medical might soon be sold off to eliminate such overlap.

However, while Lloyds executives have said the company will combine its insurance and investment propositions under plans that could enable it to reap cost savings of more than £200m, they have denied speculation that Clerical Medical will be sold off.

In November, Lloyd's chief executive, Eric Daniels, told the Independent:

"I think there's no truth in the rumours that we're selling off Clerical Medical. We think that they've done an excellent job in banc-assurance."

However, it’s difficult for industry officials to ignore the fact that selling key insurance assets would considerably help Lloyds, which is now more than 70 per cent owned by the taxpayer. The sale of some of its assets would help pay off its debts to the Exchequer more quickly.

Lloyds shares plummeted nearly 40 per cent last week, second only to Barclays, after the bank sold a £3.4bn government-guaranteed bond and a bond exchange worth £7.5bn, intended to strengthen its capital buffer.