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September 21, 2012 5:23 pm
Ageas has moved to bulk up its presence in the British general insurance market with an agreement to buy the UK operations of Groupama, the troubled French mutual, for £116m.
The Belgian financial services group, formerly known as Fortis, said the acquisition would make it the fifth-biggest non-life insurer in the UK with a 5 per cent market share.
Groupama has run into some of the most notable financial difficulties of internationally significant European insurers in recent months, after enduring losses on Greek sovereign debt and stock market investments.
The French group, which until last year was the 15th largest in Europe by premiums, put its UK business up for sale to shore up its capital position.
The UK business employs more than 600 people. Eamonn Flanagan, analyst at Shore Capital, said redundancies “have to be inevitable, it’s a sad thing.
“This is not a highly aggressive, high-growth business.” Ageas said it was too early to say whether jobs would go.
The sale equates to little more than half of the company’s book value and 5 times 2011 earnings, according to Exane BNP Paribas – discounts to the wider UK general insurance sector.
François Boissin, Exane BNP Paribas analyst, said Ageas investors would be reassured by the price and strategic fit.
“Investors were concerned about acquisition risk and excess cash deployment after expensive acquisitions over the past years,” he added.
Groupama has already sold its Spanish unit to Grupo Catalana Occidente and property and casualty assets of its Gan Eurocourtage brokerage business to Germany’s Allianz.
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