Provident unlikely to reach £170m price that owner GMAC paid in 2007

Markerstudy is to pitch itself against IAG in the race to snap up motor insurance firm Provident, according to market sources.

Sources said a deal to sign Provident should be completed within the next three months.

Troubled American parent GMAC bought Provident in May 2007 for £170m, but ran into trouble during the credit crunch and had to be rescued by a state bailout. The new price for Provident is expected to be considerably lower.

If Markerstudy were to sign Provident, it would give the Gibraltar-based firm a huge market share in the personal lines broker motor market. It bought Zenith Insurance at the end of last year and also acquired underwriters from QBE’s personal lines motor team.

Markerstudy refused to comment. An IAG spokesman said it does not comment on speculation of this type.

Provident’s two sister companies, Car Care Plan and Motors Insurance Company, are not being put up for sale by GMAC, a spokesman for the US company confirmed.