Deal includes BDML, Sureterm and Delta

Capita has sold its loss-making insurance divisions to Markerstudy, marking the outsourcing giant’s exit from high street insurance businesses.

The deal covers classic car broker Lancaster, Sureterm, affinity specialist BDML Connect and Delta Underwriting. The businesses control about £100m of premium and employ 635 staff across three locations.

The terms of the transaction were not disclosed.

Markerstudy group underwriting director Gary Humphreys told Insurance Times: “We’re delighted to be able to add it to the portfolio. With missing out on Brightside, this is a business in a similar space and gives us similar capabilities.

“One of the benefits we can bring to the situation is we have underwriting capacity within the group, so we can leverage that to increase the business flow into those brands.”

It is understood Markerstudy beat five other bidders to buy the businesses.

“Obviously Capita liked what we had to say about the business and what we’d do for it,” Humphreys said.

Together with SIP, a pensions administration business that it has decided to close, Capita’s personal lines insurance businesses contributed £47m to Capita’s turnover and are expected to make an operating loss of £15m this year.

Capita expects the sales and closure to cost around £35m.

“Although these acquisitions generated healthy profits and cash over several years, we recognise that the recent performance of these acquisitions, which cost in aggregate £70m, is disappointing,” Capita said in a statement.

Capita’s London Market and managing agency businesses are unaffected, as are its outsourced commercial lines contracts.

Staff will transfer to Markerstudy after the deal is approved by the regulator. Humphreys said Markerstudy had not yet made any decisions about redundancies, but said: “We’re looking for growth not reduction.”

Humphreys said Markerstudy wanted keep all the business Capita had, but said some insurers may decide to take affinity schemes Capita had run back in house.

The deal is expected to gain approval from the Financial Conduct Authority in four to six weeks.