Edinburgh-based Tesco Bank’s chief executive Gerry Mallon described the acquisition of Ageas’s holding in Tesco Underwriting as a “significant step” in the financial division’s development.
Tesco Bank will acquire Ageas’s 50.1 per cent stake in the underwriting joint venture for a total of £104 million plus Ageas’s part of any change in net asset value realised by Tesco Underwriting from 30 June until closing of the deal. In addition, Ageas will receive a reimbursement of an internal loan for an amount of £21m.
The bank said all parties would 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.
Bosses said the partnership had been valuable for both Tesco Bank and Ageas since the joint venture was established ten years ago, 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.
The bank added: “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 discount.”
Ageas is to focus on developing its core business and broker distribution channel.
Mallon said: “[This] 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 ten 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 chief executive, 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.”
In January, Tesco Bank outlined plans to add 100 tech jobs at its Edinburgh operation as more of us conduct our financial affairs online.
The banking offshoot of the supermarket major said it would be recruiting for software and systems engineers, systems architects, “solution designers”, project managers and IT and business analysts.
Established in 1997, the banking business employs thousands of staff in Edinburgh, Glasgow and Newcastle.