Belgian insurer Ageas and British over-50s holiday group Saga are in exclusive discussions to form a long-term motor and home insurance partnership. The proposed deal, which spans 20 years, would bring together the expertise of both companies to serve the insurance needs of Saga’s customer base. This potential partnership marks a strategic move for both businesses in expanding their respective markets.
Ageas to Acquire Saga’s Insurance Underwriting Business
As part of the negotiations, Ageas plans to acquire Saga’s insurance underwriting arm for a reported £67.5 million ($88.1 million). This acquisition would further enhance Ageas’ position in the UK insurance sector and bring significant value to the partnership.
Ageas to Take Over Saga’s Insurance Broking Operations
The partnership involves Ageas UK managing Saga’s motor and home insurance broking business, which generated gross written premiums of over £479 million in the year leading up to July 31, 2024. This operational shift would allow Ageas to expand its influence in the motor and home insurance sectors within the UK.
Saga to Receive Payments Based on Deal Performance
Under the terms of the agreement, Ageas UK will make an initial payment of £80 million to Saga. Saga could receive additional payments of up to £30 million in 2026 and a further £30 million in 2032, contingent on achieving specific volume and profitability targets. These payments reflect the long-term nature of the partnership and the expected financial benefits.
Saga Chief Executive Highlights Strategic Benefits
Saga’s Chief Executive Mike Hazell emphasized the potential advantages of the partnership, describing it as a “winning combination.” The collaboration is expected to enhance Saga’s insurance offerings, benefiting its core customer demographic of older adults in the UK.
Ageas Sees Opportunity to Strengthen Non-Life Presence in Europe
For Ageas, this deal aligns with its broader strategy of growing its non-life insurance presence across Europe, particularly in sectors catering to an ageing population. The company sees the Saga partnership as a key opportunity to reinforce its position in this market.
Ageas Faces Minor Solvency Impact
Despite the strategic benefits, Ageas acknowledged that the transaction would have a 5% negative impact on its solvency position. However, the company views this as a manageable consequence given the anticipated long-term gains from the deal.
Ageas CEO Expresses Confidence in the Deal
Ageas CEO Hans Cuyper expressed optimism about the partnership, stating that the transaction allows Ageas to grow in a market where it already possesses significant expertise. The deal is expected to build on Ageas’ existing strengths in insurance for older adults and its operational expertise in the UK.
Previous Attempt to Acquire Direct Line Abandoned
Earlier in 2024, Ageas had attempted to acquire British insurer Direct Line but eventually abandoned the bid. The partnership with Saga presents a new opportunity for Ageas to bolster its market position in the UK.
Conclusion
The proposed partnership between Ageas and Saga marks a significant step in expanding both companies’ reach in the UK motor and home insurance markets. For Ageas, the deal aligns with its European growth strategy, while for Saga, the collaboration represents an opportunity to streamline and enhance its insurance offerings. If finalized, the partnership is expected to generate substantial value for both companies over the next two decades.
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