Ageas to Acquire Groupama Insurance (UK)

September 21, 2012

Dutch-Belgian insurance group Ageas (the successor to Fortis) has confirmed that it has signed an agreement, through its UK subsidiary, to acquire Groupama Insurance Company Limited (GICL), the UK subsidiary of France’s Groupama, for a total consideration of £116 million [$189 million] (€145 million).

Ageas said the acquisition would see it become the “fifth largest UK Non-Life insurer (with a 5.2 percent market share); fourth largest Private Motor insurer (with a 11.7 percent market share); and fourth largest Personal lines insurer (with a 7.1 percent market share).”

It also indicated that the acquisition “represents a strong strategic fit and complements Ageas UK’s multi-channel distribution approach, strengthening its presence in the UK broker market. GICL offers a range of car, motorcycle, home, travel, personal accident and commercial insurance in the UK, further strengthening Ageas’ existing portfolio as well as adding new niche product areas. This transaction excludes Groupama’s UK broking operations.”

The bulletin gave the following financial figures relevant to the transaction: “Adjusted book value of GICL as at 31 December 2011 was £211 million (€252 million), [$410 million] reflecting the release of the Defined Benefit liability and the pre-transfer payment.

“Based on 2011 Non-Life income of Ageas UK and GICL, the annual inflows (or gross written premiums) of Ageas UK as a result of the acquisition would increase by around 20 percent on a pro forma basis, amounting to over £2.1 billion (€2.4 billion) [$3.42 billion].

“In terms of operational performance, GICL reported a 2011 post tax profit of £25.9 million (€29.8 million) [$42.2 million] and a combined ratio of 97.8 percent (FY2011).”

The deal is subject to regulatory approvals and closing is expected before the end of 2012. On completion of the transaction, GICL will become a wholly owned subsidiary of Ageas UK.

Bart De Smet, CEO of Ageas, cited the “strategic and financial merits” of the acquisition as “an important next step in the execution of the Ageas Group strategy towards a well balanced portfolio in terms of Life and Non-Life business.

“Following on from the start of the partnership with Tesco Bank in 2010, and more recently the acquisition of Kwik Fit Financial Services and Castle Cover, this acquisition also reflects the multi-channel, multi-brand distribution strategy of Ageas as a group and more specifically in the UK. In terms of financial merits, the return on investment is expected to exceed Ageas’ minimum return requirement of 11 percent.”

Barry Smith, CEO of Ageas UK, added: “This deal is a great strategic fit in the continuing development of Ageas in the UK. Both Ageas and GICL have strong reputations in the UK broker market and this deal reinforces our ongoing commitment to brokers and their customers. We pride ourselves on strong relationships with brokers and today’s announcement sends a clear signal that we will continue to support and work closely with them. The complementary strengths of Ageas and GICL will create an exciting business focused on customer needs whilst generating a greater return for our company.”

Source: Ageas

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