Despite the economic slowdown, it seems the insurance industry is seeing few actions. While the hottest news is that of DLG going public, Ageas has indicated firm plans of increasing its presence in the UK General Insurance market by confirming the purchase of Groupama's UK operations (other than broking arm) for £116m. This can be seen as a second major acquisition by the company after acquiring Kwik Fit Insurance Services two years ago.
If approved, this deal will see the Belgian financial group, formerly known as Fortis, become the United Kingdom's fifth largest Non-Life insurer with 5% market share and fourth largest Private Motor insurer.
Groupama had run into serious financial trouble after enduring losses on Greek sovereign debt and stock market investments, and this sale is a part of its efforts to shore up some cash. It had earlier sold part of its business to Allianz.
Ageas has openly expressed its intentions to expand its presence in General Insurance business, partly driven by low investment returns which make life insurance business less profitable due to guarantees attached to products sold.
Groupama's UK business employs some 600 heads, and according to analysts, some redundancies are inevitable. In 2011 GICL reported after-tax profits of £25.9m with a combined ratio of 97.8%.
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