GMAC Insurance, the insurance business of GMAC Financial Services, announced that it has agreed to acquire Provident Insurance, the UK-based automotive insurance division of Provident Financial PLC. 

The purchase price is approximately £170m in cash and is expected to close in the second quarter, pending regulatory approvals.

"It is a strategic priority at GMAC Insurance to continue to grow and diversify our business both in product lines and geography," said Senior Vice President of GMAC Insurance's international operations Ron Judd. 

"While our international business currently has strong operations such as Car Care Plan and Motors Insurance Company in the UK, the addition of Provident Insurance would provide entry into the U.K. automotive insurance market with the potential to also expand throughout Europe."

Provident Financial chairman John van Kuffeler said in a statement regarding the transaction : "Completion of this disposal will allow the demerger of the (Provident) International business to proceed rapidly."

"The price achieved for Provident insurance reflects the quality of this business and we ae delighted to see it pass into the ownership of GMAC which is a strong strategic buyer."

Provident Insurance had revenues of £160.9m in 2006 and made a pre-tax profit of £41m, accounting for around 20 per cent of the group's total last year.

GMAC Insurance is the insurance arm of GMAC Financial Services with a focus on automotive insurance products such as physical damage and liability coverage, extended warranty, GAP insurance and wholesale floorplan insurance (automobile dealer inventory).