Agreement reached for Tesco Bank to acquire Ageas UK’s stake in joint venture
Tesco Personal Finance Plc. (‘Tesco Bank’) and Ageas UK Limited (‘Ageas’) today confirmed that agreement has been reached for Tesco Bank to acquire Ageas’s stake in Tesco Underwriting. The investment will enable Tesco Bank to create an end-to-end insurance business that is uniquely positioned to help Tesco shoppers manage their money a little better every day.
Tesco Bank will acquire Ageas’s 50.1% stake in Tesco Underwriting for a total consideration of £104m1 plus Ageas’s part of any change in net asset value realised by Tesco Underwriting from 30 June 2020 until closing. Additionally, 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 three 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.
The partnership has been valuable for both Tesco Bank 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, and builds on the unique offering insurance customers already benefit from as part of the wider Tesco family, such as the guaranteed Clubcard discount2. In addition, Tesco’s strong brand, and focus on rewarding loyalty, will allow the business to respond positively to the recent FCA Review of General Insurance pricing.
This move comes with the mutual agreement of Ageas as it supports its business strategy to focus on developing its core business and broker distribution channel.
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 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.
1 Estimated price - the final net asset value will be confirmed as at completion and will reflect any interim dividends paid and other changes in the net asset value from 30 June 2020 to closing.
2 Guaranteed Clubcard discount is for Clubcard members.