The AA sticks by insurance arm at ‘centre of punch-up’

New AA chief Simon Breakwell today pledged to keep hold of its insurance division despite reports a possible sale triggered the exit of former chief Bob Mackenzie.

Mackenzie, 64, was dismissed by AA last month after an alleged late-night physical altercation with insurance head Mike Lloyd reportedly over a possible sale to car insurance rival Hastings.

Breakwell downplayed the idea the AA wanted to sell the unit, which Mackenzie was said to be opposed to. He said the AA would actually “double-down” investment in the insurance unit, which saw half-year revenues rise faster than its better-known breakdown service .

“There was absolutely nothing going on with Hastings. We had very early discussions and at the board meeting it was discussed for 30 seconds and it really wasn’t an issue whatsoever in my recollection,” he said. “We absolutely don’t want to sell the insurer. It’s got great management and they’ve turned that business around remarkably.”

AA shares crashed more than 10% to 150.38p after half-year revenues rose just 1%. Motor insurance policy numbers grew 8% to 616,000 customers with insurance revenues rising 3% to £66 million, outstripping growth in the roadside recovery service, where revenues were flat at £370 million.

Breakwell, who co-founded travel website Expedia, was formally named AA CEO today after serving as interim chief. He will earn £700,000 a year, £50,000 less than Mackenzie did.

He said the insurance unit had been in “graceful decline” three years ago but had “systematically turned that business around”.