Fortis and Tesco to Form Tesco Insurance Ltd. in 2010

On Friday, September 11th, Fortis Insurance International and Tesco Plc finally formalised the deal, which was first announced by them in June 2009. The two companies have agreed to form a new entity, which will be called Tesco Insurance Ltd. and will provide car, van, and household insurance services. The deal means that the efforts of the UK food retailer, Tesco, to expand into the sector of financial and insurance services, succeeded. The insurance venture will be 50.1% owned by Fortis, international insurance company based in Brussels and Utrecht, and 49.9% owned by UK-based food retailer Tesco. Both companies are planning to invest as much as £200 million in the new insurance company, which is meant to create a min. of 1,500 new job sites in Great Britain. As Fortis has an in-depth experience in the insurance sector, it will be in charge of underwriting and claims management services at Tesco Insurance Ltd., while Tesco will use its retail experience to manage sales, pricing, customer service, marketing and product development. Experts of the financial services sector, Mr. Stephen Taylor, analyst at Dolmen Securities, in particular, believe that the new insurance business will bring benefits to both, Tesco and Fortis due to Fortis’ expertise in the insurance sector and Tesco’s brand strength. The companies believe that the new insurance entity will add an average of 1.5 million of new customers to an already existing customer base of Fortis, which counts 7 million clients, as well as it will significantly increase the number of cars and households insured. The new Tesco Insurance Ltd. plans to start selling its vehicle and household insurance products by the end of 2010. The two companies have agreed their partnership till at least 2015.