Lloyds Banking Group has announced it is ditching its majority stake in esure, one of the UK's largest home and car insurers, as part of its plans to scale back its operations.
The 43%-state owned banking group is selling its 70% stake to Esure Group Holdings, run by veteran insurance entrepreneur Peter Wood, for £185 million - “slightly more” than its book value.
The management buyout is being backed by private equity vehicle Tosca Penta Investments. This is managed by Penta Capital and is in part backed by hedge fund Toscafund, which in turn is chaired by former Royal Bank of Scotland boss George Mathewson.
The online insurer, which includes the Sheilas' Wheels brand, was founded in 2000 as a joint venture by Peter Wood and the Halifax, which is now part of Lloyds Banking Group. It offers home, motor, travel and pet insurance.
Wood says: “This move creates a clean base for both companies to move forward pursuing their own insurance strengths unfettered. The agreement marks the start of a long period of hard work for everyone at esure but we will relish this challenge.”
The sale also marks Lloyds’ fifth disposal since it started selling off its non-core businesses around six months ago. This has raised around £500 million for the bank.
Archie Kane, group executive director insurance of Lloyds Banking Group, says: "This sale means we can focus our efforts on our core general insurance brands of Halifax and Lloyds TSB.
"Our priority is to deliver strong insurance products and excellent customer service across the general insurance business, thereby reinforcing our reputation as a market-leading insurance provider."
Lloyds is the largest provider of household insurance in the UK. It says it has no plans to sell its other general insurance businesses, Halifax and Lloyds Insurance.