RBS lines up advisers for Direct Line options: source

A worker walks in the foyer of a Royal Bank of Scotland office in the City of London August 6, 2010.

LONDON (Reuters) - Royal Bank of Scotland (RBS.L) is in the process of appointing advisers to review the options for its insurance business, including a possible sale, according to a source close to the group.

RBS has indicated previously it would prefer an IPO for its insurance arm, which includes popular brands Churchill and Direct Line.

But the group launched a beauty parade for advisers last week to review the option of a sale, confirmed the source.

Britain's largest motor insurer has been battered by rising injury claims, prompting speculation that the group has attracted bid interest from Warren Buffett's Berkshire Hathaway and American insurer Allstate and may be sold at a discount, according to the Sunday Times.

RBS Chief Executive Stephen Hester has embarked on a wide-ranging asset sale program after the bank, 83 percent state-owned, was ordered last year by European regulators to sell a string of assets as a price for its state bailout.

A company spokesperson said that the group has until December 2013 to sell the business.

(Reporting by Lorraine Turner; Editing by David Cowell)