RBS Insurance, part of Royal Bank of Scotland Group PLC (RBS) and J Sainsbury PLC's (SBRY.LN) finance arm Thursday said they were in talks to set up a five-year partnership under which RBS Insurance would supply car insurance under the Sainsbury's brand.

The proposed deal will include the provision of underwriting, claims management and sales and service support on all new-car insurance policies sold under the Sainsbury's Insurance brand from the summer.

"Sainsbury's Finance is an attractive partner due to their strong distribution channels in stores and on the web, and a compelling loyalty card proposition," said Paul Geddes, chief executive of RBS Insurance.

"We are currently the largest motor insurer in the U.K. and we have a proven track record working with a variety of brands across a number of key commercial sectors," he added.

RBS Insurance already has partnerships with the U.K.'s largest building society Nationwide Building Society, insurer Prudential PLC (PUK) and National Westminster Bank PLC (NWBD.LN), or NatWest, a unit of RBS.

A spokesman for RBS Insurance declined to comment on how much the deal with Sainsbury is worth.

RBS Insurance is the only remaining business RBS must sell under EU requirements following the billions of government state aid the bank received during the financial crisis. It must sell the unit by a December 2013 deadline.

-By Marietta Cauchi, Dow Jones Newswires; +44 207 842 9241; marietta.cauchi@dowjones.com
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