Ageas to Buy UK’s Insurer esure 1

Belgian insurance giant Ageas has announced that it has reached an agreement with investment firm Bain Capital to buy the UK’s leading insurer ‘esure 1’ for $1.71 billion to create the UK’s third-largest personal lines platform.

The proposed transaction, which is expected to occur in by end of 2025 subject to regulatory approvals, is fully aligned with Ageas’s strategic priorities for M&A in Europe under Elevate27, its three-year plan for sustained profitable growth and accelerated progress in key sectors.

The transaction 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. A fully underwritten 2-year bridge facility is provided by BofA Securities and Deutsche Bank Luxembourg S.A.

The deal will increase Ageas’s European markets presence through the acquisition of a controlled entity, reinforces its positioning in the UK, generates shareholder value from the realisation of synergies and enhances the cash generation of the Group.

The combination of Ageas UK and esure will have a balanced and diversified distribution spanning Direct, PCW, brokers and partnerships. It will also enable Ageas UK to accelerate the diversification of its distribution strategy into the important PCW channel in the UK market. Its underwriting footprint will widen Ageas UK’s target customer demographics and enable growth to a top-line of $4.27 billion by 2028.

Ageas UK has established itself as an accomplished insurer over the past four years by focusing on profitable growth solely in the personal lines business with a specialisation in broker distribution, outstanding technical insurance skills and technology, and successfully delivering insurance solutions for its distribution partners and over 4 million customers.

The acquisition creates significant potential for operational synergies and capital benefits to be realised in the medium term and Aegeas expect economies of scale in its UK personal lines portfolio and the accelerated implementation of the EIS IT platform, including esure’s complementary claims module, to drive operational efficiencies and cost avoidance for Ageas UK.

On a run-rate basis, this transaction is expected to generate an unlevered return on investment of over 12% for Ageas and an uplift in the Return on Equity of more than 1pp. It will become Holding Free Cash Flow accretive per share of c. 10% as from 2028.

Committed for Growth

Ageas Group CEO Hans De Cuyper said that Ageas has experienced significant growth in the UK, making it an increasingly important part of the Group in the recent years and this transaction will allow them 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.

He also said that acquiring esure also supports their strategic ambitions of re-balancing the 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,” he added.