Ageas sells its stake in UK joint venture Tesco Underwriting
Ageas and Tesco Bank announced an agreement for the acquisition by Tesco Bank of Ageas’ 50.1% stake in Tesco Underwriting. Tesco Underwriting is the UK-based Non-Life Joint Venture of Ageas UK and Tesco Bank, which provides Car and Home insurance to the UK market. This partnership was created in 2009 and was extended for a period of 7 years at the end of 2014.
The transaction will allow Ageas in the United Kingdom to focus on its core business, strengthen its solid partnerships in the brokerage market and focus its efforts on the development of the direct business. It also offers the opportunity to materialize the value created in recent years.
Tesco Bank will purchase Ageas ‘stake in Tesco Underwriting for a total amount of GBP 104 million (EUR 114 million), plus Ageas’ share of any changes in the net asset value realized by Tesco Underwriting between June 30, 2020 and fence. In addition, Ageas will receive the repayment of an internal loan in the amount of GBP 21 million (EUR 23 million). The transaction is expected to generate a capital gain of around EUR 9 million and have a positive impact of around 3% on Ageas’ solvency position based on the second quarter 2020 figures.
The transaction, which is expected to close in second quarter 2021, remains subject to the approval of the Prudential Regulation Authority. As of June 30, 2020, Tesco Underwriting had a book value of EUR 100 million (GBP 91 million). The company generated a net profit of EUR 13 million in 2019 (both figures from Ageas).
“I would like to take the opportunity to thank the management team as well as the staff of Tesco Underwriting and Tesco Bank for their loyalty, their diligence and valuable contribution to the success of the joint venture over the past decade. We wish our former partner and our former colleagues every success in continuing their business.” – CEO of Ageas, Bart De Smet.
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Underwritten by Ageas, the policy allows young drivers to pay for an initial package of 500 miles from £195, arranging an automatic top-up of 100 to 500 miles when they have 50 miles remaining, with the top-up costing less the safer the policyholder drives. Drivers can keep a track of what has been used on their app and earn a No Claims Discount for every year they remain claim free.