The partnership will give Tesco responsibility for retail pricing, sales and marketing, customer service and new product development providing greater control of the insurance products sold under the Tesco brand. Fortis will provide underwriting and claims management.
More than 1500 new jobs will also be created in the UK as a result of the deal.
The partnership also includes the creation of a new entity to underwrite and manage claims. Known as Tesco Insurance Limited the new entity will be owned 49.9% by Tesco and 50.1% by Fortis. It will start writing business towards the end of next year.
Both parties intend to invest capital to support the development and growth of Tesco Insurance. The amount of capital invested will reflect both parties' respective equity proportions and may change as the business develops. Initial investments are expected to be in the region of £100 million (EUR 115 million) each.
The partnership, which will initially run until at least 2015, covers certain Tesco insurance products including car, van and household insurance. This area of Tesco's business currently involves over £500 million (EUR 573 million) in annualised Gross Written Premium.
The deal will add another 1.5 million motor and household customers to Fortis UK's existing customer base of around 7 million people. The number of cars insured by Fortis will increase to around 2.7 million making it the second largest car insurer in the UK.
Tesco Insurance Limited will be managed independently from Fortis UK's other insurance businesses.
