London, Milan, 29^th January 2002 – The Royal Bank of Scotland Group plc’s ("Royal Bank Group") insurance subsidiary, Direct Line Group Limited ("Direct Line") is to become Italy’s second largest direct insurer with the acquisition of Royal & Sun Alliance’s direct motor insurance operation in Italy "Royal Insurance". Following the acquisition Direct Line will have over 300,000 customers in Italy.

Direct Line first moved into the Italian market in September 2001 with the purchase of Allstate’s motor insurance operation. The Direct Line brand with its distinctive red telephone, was launched in Italy last week.

Commenting on the Acquisition, Fred Goodwin, Group Chief Executive of Royal Bank Group said, "The direct insurance market in Europe remains in its infancy. The strength of the Direct Line brand makes it exceptionally well placed to challenge traditional players whose products are more expensive and who do not have the customer service ethos of Direct Line.

"We have already proved that the Direct Line model can work in Europe with Linea Directa in Spain, now the country’s largest direct insurer. This acquisition, making us the second largest direct insurer in Italy, gives us an even stronger platform for further growth."

There are 32 million cars in Italy with total motor premiums worth Euro 19.9bn annually.