Buyers stalk Fortis as parent’s woes deepen

See analysis: Future of Fortis

Buyers have been circling the insurance arm of Fortis UK as speculation mounts over the future of Fortis, its Benelux parent bank.

Trade buyers including Zurich, Allianz and AXA have been linked with the insurer, which specialises in motor policies distributed through brokers and travel insurance. Private investors have also been connected with the company.

Other buyers could be interested in the wider Fortis UK business, which includes a life operation launched last year and a number of non-UK assets.

A management buy-out (MBO) led by Barry Smith, chief executive of Fortis UK, has also been mooted, but sources close to the insurer said this was not on the table at present.

Smith said he had no idea where the rumours were coming from. “Our position is very clear. We are here to continue to grow our successful business by focusing on our clients and customers. We have no intent or desire to be distracted from this aim,” he said.

One senior market source suggested the company would have a price tag of about £600m but warned that, given the state of the economy, any buyer would be unlikely to pay full price. The source said: “The consensus is that Fortis UK will not remain a standalone business. But it’s tough to raise money at present – and those insurers that have got it are looking very carefully at how they spend it.”

Meanwhile Fortis, the bank that owns the UK insurer, has continued to struggle with activist shareholders following its bail-out by the governments of Belgium, Netherlands and Luxembourg last October.

Ping An, the Chinese insurer that owns 5% of Fortis’s shares, has threatened to vote against the proposed sale of the banking operations to BNP Paribas.

A Belgian court ordered the vote, due to be held next Wednesday, after shareholders complained that they had not been properly consulted during the emergency nationalisation of the bank last October.