Fortis ties up with Tesco for UK retail insurance

Belgium-based insurance group Fortis Insurance International and UK's Tesco PLC, Britain's largest retailer, have announced a partnership to provide motor and household insurance in Britain.

Earlier Tesco had announced announced plans to extend its customer finance division into a full-fledged bank (See: UK retailer Tesco plans move into banking) .

The companies, which announced that they were in talks in June, will each provide an initial investment of about 100 million pounds. The partnership, run until at least 2015, will cover Tesco's car, van and household insurance policies, which currently draw in over 500 million pounds in annual gross premiums.

Fortis said in a statement in Belgium that the deal would add 1.5 million motor and household customers to Fortis UK's existing customer base of around 7 million people. "The number of cars insured by Fortis will increase to around 2.7 million, making it the second-largest car insurer in the UK," it said.

The partnership will involve the creation of Tesco Insurance Ltd to underwrite and manage claims. It would be 49.9 per cent owned by Tesco and 50.1 per cent by Fortis.

The deal forms part of Tesco's plans to push deeper into financial services. Last year it bought out Royal Bank of Scotland from their finance joint venture.