Bain offers £1.2bn to take esure private

UK-based personal lines insurer esure has received £1.2 billion acquisition offer from private equity firm Bain Capital in a deal that would take esure private.

The esure board is pleased to have reached agreement with Blue (BC) Bidco (Bidco), a wholly owned subsidiary of funds managed by Bain Capital Private Equity (Europe), on the terms of a recommended all cash offer for the entire issued and to be issued ordinary share capital of esure Group, the company said in a statement.

Bain Capital has submitted a proposal to acquire all of the issued and to be issued shares of esure at 280 pence per share in cash.

Founded in 2000 by chairman Peter Wood, esure offers motor and home insurance products through the esure and Sheilas' Wheels brands.

"I'm pleased to be announcing the proposed acquisition today, because it is a great outcome for shareholders, for the company, and for customers,” Wood said. “Since its IPO (initial public offering) in 2013, esure has grown to nearly 2.5 million in-force policies, delivered more than £800 million of annual gross written premiums, and returned just under £300 million to shareholders in dividends as well as the considerable value delivered to shareholders through the demerger of GoCompare," Wood added.

The acquisition offer represents a premium of approximately 37 percent to the closing share price of 204 pence on Aug. 10, 2018, the last business day prior to this takeover announcement.

The esure board has indicated to Bain Capital that it would be minded to recommend a firm offer for esure if made by Bain Capital at the price set out in the proposal.

In the first half of 2018 esure grew gross written premiums by 12 percent year on year to £440.3 million. Pre-tax profit decreased to £36.1 million from £45.1 million over the period. The results included an impact of £14m from adverse weather-related claims costs in the home and motor accounts.

"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,” Wood said.

Darren Ogden, esure interim CEO, added: "The first half of 2018 has seen continued growth in premiums and polices in a period impacted by exceptional weather costs.

"The motor account grew strongly, underpinned by the Group's footprint expansion programmes which now account for over 400,000 in-force policies. In addition, the Home account returned to growth in the month of June, aided by the Group's investment in its underwriting and data capability. The Group will remain disciplined in its rating actions as it targets 3 million in-force policies by 2020,” Ogden noted.

"The UK suffered a number of adverse weather events in the first half of 2018 and these contributed to exceptional costs of £14 million in the home and motor accounts.

"The group remains well placed to continue delivering profitable growth in 2018," Ogden said.

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