Tesco Personal Finance plc and Ageas UK Limited have signed an agreement for Edinburgh-based Tesco Bank to acquire Ageas’s stake in Tesco Underwriting in a £104 million deal.

“The investment will enable Tesco Bank to create an end-to-end insurance business that is uniquely positioned to help Tesco shoppers manage their money a little better every day,” said Tesco Bank.

“Tesco Bank will acquire Ageas’s 50.1% stake in Tesco Underwriting for a total consideration of £104m plus Ageas’s part of any change in net asset value realised by Tesco Underwriting from 30 June 2020 until closing.

“Additionally, Ageas will receive a reimbursement of an internal loan for an amount of £21m.

“The acquisition will be funded from Tesco Bank’s cash reserves.

“All three parties will work closely to ensure a smooth transition ahead of the formal change in control, which is expected to take place in the second quarter of 2021.

“The partnership has been valuable for both Tesco Bank and Ageas since the joint venture was established in 2010, underwriting Tesco Bank-branded Car and Home insurance policies that have proved popular with customers.

“In 2014 the partnership was extended for a further seven years to 2021.”

Tesco Bank CEO Gerry Mallon said: “Today’s announcement is a significant step in Tesco Bank’s development which underlines our commitment to the insurance market and our customers.

“We look forward to doing more of what we know our customers want – offering products that have a strong emphasis on value, helpful benefits and rewarding loyalty.

“Tesco Underwriting has benefitted from Ageas’s expertise in the market over the last 10 years, and as partners we are committed to ensuring a smooth transition for all of our stakeholders as we complete this transaction.”