Tesco and Fortis in insurance discussions

Tesco Personal Finance (TPF) and Fortis UK are in discussions to form a new partnership to provide motor and household insurance.

A deal has been agreed in principle to offer new joint insurance products. Tesco will take greater control of pricing and developing new products while Fortis will bring its expertise on underwriting and claims management. Jointly the companies will create more than 1500 new UK jobs.

Final binding terms are expected to be agreed in the next two months and the deal will be subject to normal regulatory approvals.

Tesco director and chief executive of Retailing Services Andrew Higginson says, "This is an important strategic move in the development of Tesco Personal Finance under Tesco's sole ownership. General insurance is a key area for TPF and this partnership with Fortis will enable us to take it to the next level. I am delighted to be working with them at this exciting time for our business."

Tesco Personal Finance Chief Executive Benny Higgins adds, "Tesco already has a successful insurance business with a track record for keen pricing and great service. This new partnership... will provide us with the flexibility to build on this success and grow the business further by providing customers' with innovative new products and great value.

"We are delighted to be working with Tesco Personal Finance on this significant new insurance partnership. Our unique competitive proposition of high customer service delivered at low cost will go a long way to winning this important deal," says Fortis UK chief executive Barry Smith.

The partnership involves over £500 million in annualised total Gross Written Premium (GWP) and is expected to grow. It could be underwriting new business and renewals from the second half of next year.