Esure accepts £1.2bn Bain Capital takeover bid

Esure announced that it has agreed to a takeover bid by global investment firm, Bain Capital Private Equity for £1.2bn.

Following yesterdays news, that the insurer received an offer of £1.17bn from Blue Bidco, a subsidiary of Boston-based, Bain Capital, Esure is valued at 280p per share under the terms of the offer.

Alongside the acquistion, Esure’s interim results reporting a 12% rise in gross written premiums (GWP) to £440.3m compared to H1 2017 at £351.3m.

Commenting on the deal, Sir Peter Wood, chairman of Esure and its largest shareholder, said: “Alongside these results, I’m pleased to be announcing the Proposed Acquisition today, because it is a great outcome for shareholders, for the company, and for customers.

“Since its initial public offering (IPO) in 2013, Esure has grown to nearly 2.5 million in-force policies, delivered more than £800m of annual gross written premiums, and returned just under £300m to shareholders in dividends as well as the considerable value delivered to shareholders through the demerger of GoCompare.”

Wood will continue as chairman as part of the deal. He has irrevocably accepted the Bain offer. 

Wood added: “As a private company and with Bain Capital’s backing, Esure will be able to invest behind the innovation required to fully realise the opportunities in this market.

Profitable Growth

Wood said: “The first half of 2018 demonstrates that Esure continues to deliver profitable growth and it is pleasing to see that we have grown our market share in motor during this period.”

Esure’s GWP in its motor business increased to £398.4m (H1 2017: £351.3m) and its motor combined operating ratio (COR) was 97.6% compared to 95.0% in the same period of 2017. Overall COR worsened at 100.9% in the first six months of 2018, compared to 96.6% in the first half of 2017.

Pretax profit fell to £35.1m from H1 2017 £45.1m, the insurer adverse weather impacted claim costs in home and motor to the sum of £14m.

Strategic benefits

Independent directors at Esure said that they are ”confident” that the insurer is well placed to make good progress and deliver shareholder value and added that the acquisition will deliver a ”number of strategic benefits” to the business including the ”opportunity to benefit from further investment by Bain Capital in a private context.”

Luca Bassi, managing director of Bain Capital Europe, said of the offer: “Esure’s nimble and focused approach, lean structure and strong use of technology positions it to grow in a changing insurance industry: insurance companies with smarter operations and better technology are best placed to meet customers’ needs at competitive prices whilst delivering profitable growth.”

Robin Marshall, managing director and co-head of Bain Capital Europe, said that Sir Peter Wood was a ”towering figure” in the industry. He said: “We are excited that he will remain a minority shareholder in the company and also grateful that he will remain as chairman to facilitate a smooth transition to private ownership.”

”We are committed to investing capital in the best technology for Esure and believe that this, combined with our experience of growing highly regulated, complex financial services businesses can help Esure thrive. We look forward to partnering with Esure’s management team to accelerate its growth.”