Fortis UK spends £215m on Kwik Fit Insurance

Published on Saturday 3 July 2010 03:41

KWIK Fit Insurance, part of the Kwik Fit Group founded by Scots entrepreneur Sir Tom Farmer, has been sold by its French owner to Fortis UK for £215 million.

The Uddingston-based firm, which was launched by Farmer in 1995 and employs around 1,000 staff, has been owned by Parisian private equity firm PAI Partners since 2005.

The group has been seeking a buyer for its insurance operations since February in a bid to reduce its net debt, which stood at 811m at the end of last year. But it is believed that PAI is looking to sell off the entire Kwik Fit group – with private equity companies including Blackstone, Permira and KKR said to be considering a bid.

Kwik Fit said the sale, combined with the 20m PAI injected into the business last year in a bid to avoid breaching its banking covenants, would reduce the group's net debt to 486m.

"The sale of the UK insurance business at an attractive price enables the group to reduce debt significantly and to invest further in our core fast-fit business," said Kwik Fit chief executive Ian Fraser.

"This will significantly strengthen the group's balance sheet, leaving the business in a strong position to exploit growth opportunities in its core fast-fit businesses," the company added in a statement.

Fortis is the UK arm of Belgian insurer Ageas – the remainder of former banking and insurance giant Fortis, which joined with part-nationalised Royal Bank of Scotland in a disastrous consortium bid for ABN Amro in 2007 and which was eventually broken up following the financial crisis PAI bought Kwik-Fit for 800m in 2005 from rival private equity group CVC. It has been in private equity hands since 2002, having previously been owned by car giant Ford, which acquired the chain from Farmer in 1999.

Kwik Fit Insurance – which has around 600,000 customers with policies across lines including home, car and travel insurance – operates under the Kwik Fit brand, as well as through the Green Insurance Company and Express Insurance names. It bought Birmingham-based Express Insurance in 2007, significantly growing the size of its business.

Ageas's UK chief executive, Barry Smith, said: "This is a great acquisition for our company. It further reinforces our retail capability by adding a respected business and their powerful brands to our portfolio.

"The purchase of Kwik-Fit is part of Ageas' strategy in the UK to increase the breadth and depth of our product offering."

Aegas, which will still trade under the Fortis name in the UK until next year, also struck a partnership deal with Tesco Bank last year to handle its handle car and household insurance.

It said the deal would consolidate its position as the fourth largest personal insurance broker in the UK, with 1.6 million customers.

Accounts for Kwik Fit's insurance arm, filed at Companies House last week, revealed a 24 per cent rise in pre-tax profits, to 10.9m in 2009, boosted by strong growth in revenues and cost-cutting. Revenues rose by 4 per cent to 66.9m, boosted by strong sales in its household insurance division.

The Kwik-Fit Group, excluding the insurance operations, yesterday reported sales of 364m in the first five months of this year – a 5.9 per cent rise on the same period in 2009. It added that group earnings before interest, tax, depreciation and amortisation, for the same period was 29.3m, 17.7 per cent ahead of 2009, driven by investment in MOT capacity and new products and services.

The group was founded by Farmer in 1971 with the opening of an initial site in Edinburgh 's McDonald Road. It now has 1,800 service outlets across Europe and a workforce of 9,000.