Analysts are sceptical that loss-making Groupama Insurance will find a buyer by its stated deadline of December 2001 because insurers have already snapped up additional business following the collapse of Independent.
Groupama's 1,300 staff in the UK were this week told its French parent had decided to put the company up for sale, following a review of its international operations.
But analyst David Wharrier at Fitch said he did not believe Groupama presented an attractive buy: “The company has been underwriting losses for most of the past six years.”
Accounts for the UK arm of Groupama show it suffered an operating loss of £36.5m in 2000, following the termination of part of its London market operations.
Its gross written premium in 2000 stood at £427m, but only £323m of this was continuing business – £104m in premiums was from discontinued accounts.
Wharrier added that a prime candidate for expansion – Royal & Sunalliance (R&SA) – was still digesting commercial and personal lines business it had picked up from Independent's demise.
Another analyst, James Quin of HSBC, also thought it unlikely that R&SA or Zurich would be interested in bidding for Groupama UK.
“A growth in premiums and the weakness of the stock market is putting pressure on the capital bases of most insurance companies. They will be more concerned with their solvency positions than in making acquisitions.”
Groupama group marketing manager Jamie Marchant said its parent company had decided to put its UK arm up for sale because “the UK is highly competitive and does not suit its strategy of operating in markets with a sustained profit potential”.
He said the sale represented a golden opportunity to buy a complete insurance company, more or less off the shelf.
Marchant added: “Groupama has said it will support its UK operation until it is sold. It is business as usual for brokers.
“The results this year are looking very promising – we are on target to write £600m of business – but we are obviously disappointed that Groupama is not remaining with us for the longer term.”
Groupama corporate director Paul Picknett said management had received a high level of interest concerning the sale.
But he added: “The timing (of the sale) is unfortunate, with what has happened to Independent, but I want to stress that our reserves are extremely robust.”
