Ageas announces that it has agreed with Bain Capital to buy esure, a leading digital personal lines insurer with strong positioning on price comparison websites (PCW) in the UK. The proposed deal is aligned with Ageas’ strategic priorities for M&A in Europe under Elevate27.
This deal increases Ageas’s European market presence by acquiring a controlled entity, reinforcing its positioning in the UK, generating shareholder value from the realisation of synergies, and enhancing the group’s cash generation.
The combination of Ageas UK and esure creates the third-largest UK personal lines platform with a balanced and diversified distribution spanning Direct, PCW, brokers, and partnerships. The acquisition will enable Ageas UK to diversify its distribution strategy into the important PCW channel in the UK market. Plus, its underwriting footprint will widen Ageas UK’s target customer demographics and enable growth to a top-line of £3.25 billion (€3.8 billion) by 2028.
Ageas UK established itself as an accomplished insurer in the past few years by focusing on profitable growth solely in the personal lines business. With a specialism in broker distribution and technical insurance skills, Ageas UK delivers insurance solutions for its distribution partners and over 4 million customers.
esure is a leading UK personal lines insurer with a fully digital distribution model through the PCW channel and 3 popular brands: esure, Sheilas’ Wheels, and First Alternative. This year, esure had more than 2.1 million policies and GWP of GBP1 billion (€1.2 billion).
Deal terms: Under the terms of the deal, Ageas will pay Bain Capital a cash consideration of GBP 1.295 billion (EUR 1.510 billion) for esure, respecting a Solvency II target ratio of 150% as at year-end 2024.
The deal will be financed through a combination of surplus cash and newly issued senior and hybrid debt and/or equity within the existing authorisations and subject to market conditions. BofA Securities and Deutsche Bank Luxembourg S.A. provide a fully underwritten 2-year bridge facility.
Entering the next strategic period, the projections are that the transaction will generate a full cost-saving potential in excess of £100 million (c. EUR 115 million) per annum, before tax. On a run-rate basis, this deal is expected to generate an unlevered return on investment of over 12% for Ageas.
The deal is expected to be completed in the second half of this year and remains subject to regulatory approvals.
Advisors: BofA Securities is acting as financial adviser and Allen Overy Shearman Sterling is acting as legal counsel to Ageas in relation to the deal.
Fenchurch Advisory Partners and Goldman Sachs International served as financial advisers to Bain Capital and esure. Weil, Gotshal & Manges (London) served as legal adviser and Norton Rose Fulbright served as regulatory adviser to Bain Capital and esure.
KEY QUOTES:
“We are delighted to have reached an agreement to acquire esure. In recent years, Ageas has experienced significant growth in the UK, making it an increasingly important part of the Group. This transaction will allow us to offer competitive value propositions to a wider customer profile via a multi-channel distribution model, positioning Ageas UK as one of the top three personal lines insurers. Acquiring esure also supports our strategic ambitions of re-balancing our Group profile towards businesses with high cash conversion. We remain, of course, committed to our Elevate27 financial objectives, including our commitment to a progressive dividend policy, and will observe the full synergies of this transaction in the forthcoming strategic period.”
- Hans De Cuyper, Ageas Group CEO
“esure is a significant addition to the Ageas UK business and aligns perfectly with our growth strategy. As demand for motor and home insurance grows, Ageas will be perfectly positioned to gain market share and become the insurer of choice for our existing and new customers. The combined Ageas and esure franchise will benefit from an outstanding customer offering, through market leading technology and prominent brands, that will drive our expansion into new customer demographics. Under Elevate27, we want to continue to grow our broker and partnerships personal lines business in the UK, and esure will help us to rapidly expand our direct distribution, our customer reach, and our scale overall. esure’s technical capabilities will match Ageas UK’s and will enable us to develop our well-balanced business at greater pace and serve a wider range of customers. We’re really excited for the potential this brings our UK business and wider group.”
- Ant Middle, Ageas UK CEO
“This transaction brings together two highly complementary businesses and creates an even stronger platform for continued innovation, growth and excellent delivery for our customers. Combining Ageas’s scale, financial strength and excellent broker relationships with esure’s strong retail brands, market-leading data capabilities and strength on PCWs, alongside a shared technology platform, will enhance our combined ability to invest in our customer proposition and open up new opportunities for growth. I am deeply proud of what the esure team has achieved to date. We look forward to working alongside the Ageas team to build the UK’s leading personal lines insurer.”
- David McMillan, esure Group CEO
“We are pleased to have supported esure through its transformation and growth journey. During our ownership, esure has built the leading tech platform in UK insurance and their highly efficient operations have set a new standard for the industry. This transaction is a testament to esure’s strong market position and the state-of-the-art technology platform built under Bain Capital’s tenure, with the business now at record levels of profitability. We are confident that Ageas is the right partner to continue this legacy of success and innovation.”
- Luca Bassi, Partner at Bain Capital
