Insurer, motoring body play down disunity
Insurance Australia Group investors have been left in the dark over why the NRMA motoring arm has offloaded millions of IAG shares, although the two companies yesterday attempted to play down suggestions of a rift.
Insurance Australia Group investors have been left in the dark over why the NRMA motoring arm has offloaded millions of IAG shares, although the two companies yesterday attempted to play down suggestions of a rift. INSURANCE Australia Group investors have been left in the dark over why the NRMA motoring arm has offloaded millions of IAG shares, although the two companies yesterday attempted to play down suggestions of a rift.Talks between IAG and the board of NRMA took place on Tuesday night as BusinessDay revealed simmering frustration inside the motoring arm over links between the two that have culminated in NRMA selling some 13 million shares in IAG in recent months.The shares yesterday lost as much as 13?, or 3.8 per cent, in early trade but finished 2? lower at $3.38.IAG did not issue a statement to the stock exchange. The two companies instead opted to issue a joint statement to the media.''Insurance Australia Group and NRMA Motoring & Services are both committed to the positive and mutually beneficial business relationship between the two organisations,'' it said.The statement said there was a ''strong alignment of interests'' between IAG and NRMA motoring arm. It also noted there was significant overlap between membership of the NRMA Motoring group, customers of Insurance Australia Group and IAG's shareholders.Source close to the NRMA board told BusinessDay it was rare for directors of the two companies to meet. But this assertion was challenged by both companies.''The board and management teams of IAG and NRMA meet regularly to discuss mutual business interests and remain committed to an ongoing close relationship between the two organisations,'' the statement said.Spokesman for both companies have declined to quantify how often the boards meet.A spokesman for NRMA declined to discuss the share sale. ''We don't talk about changes in our investment portfolio,'' he said.The NRMA and IAG have denied there was a conflict but failed to explain what drove the NRMA to sell the shares in breach of an important business agreement. The NRMA is prohibited from selling below 29.3 million shares, or 2 per cent, as part of the demutualisation agreement signed in 2000. The NRMA is also prohibited from offering its own financial service products or entering into insurance.Richard Talbot, a former NRMA director best known for his legal attempt to block the spinoff of the insurance arm, yesterday reiterated his call for the two organisations to part ways."It has always been my belief that the terms of the demutualisation were unfair and heavily loaded to IAG," Mr Talbot said.IAG was spun out of NRMA in 2000. Since then the two boards have have their ups and downs, but the sale of shares by NRMA in the past year has taken tensions to new levels.