Car Care Plan, GMAC Insurance’s UK-based extended warranty insurer, has bought Provident Insurance, a motor insurance business, for £170 million in cash.
Car Care Plan, GMAC Insurance’s UK-based extended warranty insurer, has bought Provident Insurance, a motor insurance business, for £170 million in cash.
The company was sold by Provident Financial plc as it was not considered to be a core part of its business. This disposal was part of a capital re-structuring ahead of the demerger of its international businesses.
The acquisition will complement GMAC’s existing UK insurance operations as well as supporting its European growth initiatives.
GMAC Insurance’s international senior vice president, Ron Judd, said: “It is a strategic priority at GMAC Insurance to continue to grow and diversify our business both in product lines and geography.
“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 UK automotive insurance market with the potential to expand throughout Europe.”
Provident Financial’s chairman, John van Kuffeler, added: “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.”
GMAC Insurance, the insurance business of GMAC Financial Services, focuses on automotive insurance products such as physical damage and liability coverage, extended warranty, GAP insurance and automobile dealer inventory services.
Car Care Plan is one of GMAC’s international businesses, which also include ABA Seguros, a Mexican motor insurer, GMAC Life Forsakring, a Swedish credit life company, and an international reinsurance business based in Bermuda.
Provident Insurance is a vehicle insurer specialising in non-comprehensive coverage, second cars and female drivers. It distributes its products through a broad network of brokers and through an online business, Yes Insurance.
In the year to the end of December 2006, Provident Insurance had a £160.9 million turnover with a pre-tax profit of £41 million. Its gross assets for the same period amounted to £436.7 million with net assets of £81.3 million. The disposal will give rise to a pre-tax exceptional gain of some £70 million.
