NRMA and IAG admit share sale but deny feud
INVESTORS in Insurance Australia Group were left in the dark over why the NRMA's motoring arm has offloaded millions of shares, although the two companies yesterday attempted to hose down suggestions of a rift.
INVESTORS in Insurance Australia Group were left in the dark over why the NRMA's motoring arm has offloaded millions of shares, although the two companies yesterday attempted to hose down suggestions of a rift.Talks between IAG and the board of NRMA took place on Tuesday night, coming as BusinessDay revealed simmering frustration inside the motoring arm over links between the two, culminating in NRMA's sale of some 13 million shares in IAG over recent months.IAG shares lost as much as 3.8 per cent in early trade yesterday but recovered to close two cents lower at $3.38.While IAG did not issue a statement to the Australian Stock Exchange, the two companies issued 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," the statement said.The statement said there was a "strong alignment of interests" between IAG and NRMA. It also noted there was significant overlap between membership of the NRMA motoring group, and customers and shareholders of IAG.Source close to the NRMA board told BusinessDay it was rare for directors of the two companies to meet. However, 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," the statement said.Spokesmen for both companies have declined to quantify how often the boards meet. "We don't talk about changes in our investment portfolio," a NRMA spokesman said.The NRMA and IAG have denied there is a conflict, but failed to explain what drove the NRMA to sell the shares.The NRMA is prohibited from selling below 29.3 million shares, or 2 per cent, as part of the demutualisation agreement signed in 2000.Richard Talbot, a former NRMA director best known for his legal bid to block the spin-off of the insurance arm, yesterday reiterated his call for the two 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. Under a complex agreement, the NRMA now pays up to $10 million a year to use IAG's branch network, IT system, call centres, country service centres, assistance services and back office services.IAG executives are set to meet with fund managers in Sydney today.