Tesco Bank confirms full acquisition of Tesco Underwriting
14 October 2020
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.”
Notes to Editors
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.
Media contact details:
Barry Cameron, Head of Media Relations & Public Affairs
email@example.com, 07841 192899
Maggie Hill, Media Relations Manager
Press.firstname.lastname@example.org, +44 (0)2380 313147
About Tesco Bank
Tesco Bank’s goal is to make banking and insurance easier and better value for people who shop at Tesco. We’ve been around since 1997 and today we help more than 5 million customers manage their money every day. Our 4,000 colleagues serve our customers seven days a week from our three main centres in Edinburgh, Glasgow and Newcastle, and we are also available through online and mobile banking 24/7. Tesco Bank participates in the Chartered Banker Professional Standards Board.
Tesco Bank is a trading name of Tesco Personal Finance plc. Registered in Scotland No. SC173199. Registered Office: 2 South Gyle Crescent, Edinburgh, EH12 9FQ
Ageas is one of the largest general insurers in the United Kingdom, providing insurance to around five million customers. It offers car and home, travel and small business insurance through brokers, affinity partners and its own brands. Customers can buy Ageas branded car insurance direct from ageas.co.uk. Ageas UK holds a majority share in Tesco Underwriting, providing home and motor insurance to Tesco Bank customers. Ageas is a wholly owned subsidiary of Ageas Group, which is listed on the Belgium stock exchange.
Ageas (UK) Limited registered office: Ageas House, Hampshire Corporate Park, Templars Way, Eastleigh, Hampshire, SO53 3YA. Registered number: 1093301. Registered in England and Wales.