Belgium’s Ageas in exclusive negotiations for an insurance exchange relationship with the UK’s Saga

LONDON (Reuters) – Belgian insurer Ageas is in exclusive talks to set up a 20-year commercial auto and home insurance policy with British over 50s holiday group Saga, the two companies said on Friday.

Under the deal, Ageas will also buy Saga’s insurance underwriting business for 67.5 million pounds ($88.1 million).

The partnership will see Ageas UK run Saga’s car and home products business, which distributes products with more than 479 million written premiums annually until July 31, 2024, the companies said.

Ageas UK will pay Saga 80 million pounds up front and Saga can receive 30 million pounds in 2026 and up to 30 million pounds in 2032, depending on volume and profitability targets.

The deal “will create a winning combination,” Saga CEO Mike Hazell said in a statement.

Ageas said in a separate statement that the agreement will be in line with its plans to build on non-life in Europe, as well as focus on products for the elderly.

The deal will have a negative impact on Ageas’ 5% dividend payout ratio.

“This transaction allows us to grow in a market where we already have real capacity and expertise,” said Ageas CEO Hans Cuyper.

Ageas had abandoned attempts to take over British insurer Direct Line earlier this year.

($1 = 0.7666 pounds)

(Reporting by Shanima A in Bengaluru and Carolyn Cohn in London; Editing by Sonia Cheema and Emelia Sithole-Matarise)