AA, rival Hastings insurance merger talks end

(Adds Hastings statement, details, background)

Sept 12 (Reuters) - British insurer Hastings (Frankfurt: 8HG.F - news) said on Tuesday that preliminary talks earlier this year to explore a possible merger with roadside recovery and motor insurance company AA (Frankfurt: A116XA - news) 's insurance business had ended.

"The Board confirms that the company did have preliminary discussions with the AA regarding a potential partnership with its insurance division, which have ceased," Hastings said in a statement.

"Whilst Hastings regularly reviews selective acquisition opportunities, its core strategy remains to deliver on its organic growth and its disclosed targets," the insurer added.

AA also confirmed the talks in a statement.

"AA regularly reviews all strategic options, including whether a spin-off of any of its business lines would unlock further value and be in its shareholders' interests," AA said in a statement.

The Financial Times reported on Monday that AA was looking to separate its insurance unit from its main rescue and repair business and merge it with Hastings.

AA last month fired Executive Chairman Bob Mackenzie for gross misconduct and lowered its full-year forecasts. The company also said its performance in the first half of its financial year, which started in February, had been hit by a combination of an erratic work load and an inherently fixed cost base.

On the other hand, rising British motor insurance premiums helped Hastings deliver a jump in first-half profit as people shopped around for policies, which the insurer said lifted its sales.

(Reporting by Noor Zainab Hussain in Bengaluru; Editing by Rachel Armstrong and Louise Heavens)