Financial services deal
Tesco buys out Ageas stake in underwriting business
Deal regarded as ‘significant step’ (pic: Terry Murden)
Tesco Bank has acquired Ageas’s 50.1% stake in Tesco Underwriting in a deal worth £104m, confirming its interest reported in Daily Business last November.
It will enable Edinburgh-based Tesco Bank to create an end-to-end insurance business, it said.
Aside from the cash element, Tesco will benefit from any change in net asset value in Ageas’s share realised by Tesco Underwriting from 30 June until closing.
Ageas will receive a reimbursement of an internal loan for an amount of £21m.
The acquisition will be funded from Tesco Bank’s cash reserves. All parties will work closely to ensure a smooth transition ahead of the formal change in control, which is expected to take place in the second quarter of 2021.
Our report from last November
Tesco Bank said the partnership has been valuable for both itself and Ageas since the joint venture was established in 2010, underwriting Tesco Bank-branded car and home insurance policies that have proved popular with customers. In 2014 the partnership was extended for a further seven years to 2021.
This investment is in line with Tesco Bank’s strategy of focusing on propositions which better meet the needs of Tesco shoppers.
Gerry Mallon, Tesco Bank chief executive, said: “Today’s announcement is a significant step in Tesco Bank’s development which underlines our commitment to the insurance market and our customers.
“We look forward to doing more of what we know our customers want – offering products that have a strong emphasis on value, helpful benefits and rewarding loyalty.
“Tesco Underwriting has benefitted from Ageas’s expertise in the market over the last 10 years, and as partners we are committed to ensuring a smooth transition for all of our stakeholders as we complete this transaction.”
Ant Middle, Ageas UK CEO added: “The success of Tesco Underwriting over the last ten years is further evidence of our credentials and expertise for building strong partnerships.
“We are justifiably proud of the progress made by this business, led more latterly by Steve Kingshott and his team. Given the direction of both businesses, it’s now the right time for us to hand over to Tesco Bank to take the business forward.
“There is work to do to as we hand over control to ensure as smooth a transition as possible and we wish Tesco Bank every success in further enhancing its insurance proposition.”