TESCO Bank is paying £104 million to buy out its joint venture partner in a co-owned underwriting business.

By acquiring the majority 50.1% stake in Tesco Underwriting currently held by Hampshire-based Ageas, one of the UK’s largest general insurers, Tesco Bank said it would be able to create an “end-to-end insurance business that is uniquely positioned to help Tesco shoppers manage their money a little better every day.”

The partners have been working together since 2010, underwriting Tesco Bank-branded car and home insurance policies. In 2014 the partnership was extended for a further seven years to 2021.

Tesco Bank is based in Edinburgh and has 4,000 staff in Edinburgh, Glasgow and Newcastle.

Gerry Mallon, Tesco Bank chief executive, said: “Tesco Underwriting has benefitted from Ageas’s expertise in the market over the last ten years, and as partners we are committed to ensuring a smooth transition for all of our stakeholders as we complete this transaction.”

Ant Middle, Ageas UK chief executive said: “Given the direction of both businesses, it’s now the right time for us to hand over to Tesco Bank to take the business forward.”

The deal will be funded from Tesco Bank’s cash reserves and will include reimbursement of an internal loan from Ageas for an amount of £21m. Ageas will also receive its share of any change in net asset value realised by Tesco Underwriting from 30 June 2020 until the deal closes The formal change in control is expected to take place in the second quarter of 2021.