Churchill's bulldog has a new owner

RBS, which already owns the Direct Line insurance firm, said the deal would make it the UK's third largest general insurer.

Churchill, which employs 8,500 people in the UK, is being sold by Swiss bank Credit Suisse Group.

RBS said the deal would lead to job losses, but that the number of posts shed would be in the "hundreds rather than thousands".

'Excellent acquisition'

In a notice on its website, Churchill said it would be "business as usual" for its staff, customers and suppliers.

RBS said it would keep both the Direct Line and Churchill brands, and would "ensure minimal disruption to customer-facing staff".

It added it would deliver cost cuts by combining IT, claims and central functions.

"Churchill is an excellent acquisition for us; it will fit well alongside Direct Line, and will bring several advantages to the group," said RBS group chief executive Fred Goodwin.

"In direct channels, Churchill's strength in home insurance will balance Direct Line's strong position in motor insurance.

"Both Churchill and Direct Line have expertise in the distribution of general insurance products through partners, under their brands."

Shares rise

In a trading update, RBS also said that its first-half results should be in line with expectations.

It added that provisions for bad debts should improve and that credit quality remained strong.

In afternoon trade on the London stock market, RBS shares were up 100p, or 6.2%, at 1721p.