Thu, 10 May 2007 | BUSINESS SALE
A subsidiary of GMAC Insurance has announced that it will take on Provident Financial’s motor insurance arm for roughly £170 million. News of this deal comes ahead of Provident’s planned demerger of its businesses abroad.
The decision to sell its insurance unit comes in time for Provident Financial’s split, which is expected to take place by the end of the following month.
The company said on Wednesday that due to the sale of its motor insurance business to GMAC’s Car Care Plan, which is likely to finish in June, it would book in a £70-million pre-tax exceptional gain.
In a statement to the public, Chairman John van Kuffeler said: “Completion of this disposal will allow the demerger of the International business to proceed rapidly.
“The price achieved for Provident Insurance reflects the quality of this business and we are delighted to see it pass into the ownership of GMAC which is a strong strategic buyer.”
Provident Financial specialises in doorstep loans and claimed that in March it had received “quite a reasonable number” of offers for Provident Insurance, indicating to analysts that the business could be worth up to £200 million.
In 2006, reports showed that Provident Insurance had generated revenues of £160.9 million with a pre-tax profit of £41 million. This is approximately 20 per cent of Provident Financial’s overall total in the previous year.
GMAC claimed that the acquisition would complement its existing insurance operations in the UK by growing its portfolio of clients, and by also boosting its European development initiatives.
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