AIG forms life pact with RBS

AIG has become the sole seller of life insurance for Royal Bank of Scotland (RBS).

The American insurer will sell several products, including life and critical illness cover, mainly alongside the mortgage business of RBS and its divisions Natwest and Ulster Bank. It is the company’s biggest push back into the life insurance market since it was bailed out during the financial crisis, according to a report in The Times.

The deal brings to an end a five-year arrangement with Aviva. In 2010 RBS said that the deal with Aviva would “position RBS to compete more effectively and to respond to developments in the bancassurance market.”

The deal is set to significantly expand the presence of AIG Life in the UK, whose other noteworthy but smaller partnership currently is with NFU Mutual.

AIG bought the UK life company Ageas Protect in 2015; in the previous few years AIG had sold or floated businesses to raise cash in order to repay the US government for its USD180 billion bailout during the financial crisis. The regulator’s mortgage market review, which puts more pressure on banks to ensure that customers can afford their loans, has added to employees’ workload, so outsourcing the insurance cover for those who want to buy it alongside their home loan will remove some of the strain from bank staff.