Insurer pulls back from private motor as it ends RAC joint venture
AXA further decreased its presence in the private motor sector with confirmation this week that it is to sell AXA Direct to RAC and terminate their joint venture.
The deal marks the end of the six-year joint venture between the two that has seen AXA move from underwriting and administering the motor-based RAC book to working on a purely administrative basis.
RAC agreed to pay £29.8m for AXA Direct, which has 270,000 mostly private motor policyholders. A further payment of £10.7m is linked to successful renewal of the AXA Direct policy base.
RAC chief executive Andy Harrison said: "This transaction marks a significant milestone in the development of our financial services strategy, which we will now control. It simplifies our insurance business and adds scale."
Under the deal, around 300 staff in Darlington and Morecambe call centres will move from AXA to RAC.
Customers will then have their renewals handled by the BDML panel, which already handles the RAC account.
BDML managing director Sandy Dunn said: "The new business will generate almost £100m for our panel over the first 12 months.
"We will be increasing our staffing levels in Portsmouth by about 60 to handle the new business."
Added to RAC's current level of 140,000 home and motor policyholders, the new business should push RAC up to around 300,000 customers within the first year.
In a statement to the stockmarket, RAC Financial Services reported that in 2003, AXA Direct received gross written premiums of £94m.