Swinton to buy Budget Retail

Swinton is set to rival AA Insurance as the UK's largest personal lines intermediary after acquiring Budget's retail division.

The deal gives Swinton access to two million policyholders via 442 branches across the UK, matching the AA's customer numbers. The deal looks set to propel Swinton up the Insurance Times Top 50 Brokers list from its current position of

No 9. The AA is at No 7.

By the end of 2006, Swinton said it aimed to capture £500m of gross written premiums, including the £65m GWP generated by Budget's retail division.

It plans to swell this to £600m GWP by the end of 2007.

Initially, 500 jobs will be transferred from Budget to Swinton, which intends to launch a strategic review of the two business models.

Swinton chief executive Patrick Smith: "This is not a cost cutting exercise. Broadly speaking the 500 staff will be kept on in a broad capacity."

Budget's 94 regional branches will be re-branded during the next 12 months to Swinton or its sister company, Colonade.

Smith said: "Our model has great capacity for expansion and we intend to take on the giants of our industry and show that we can become the leading player in personal lines distribution."

Budget, meanwhile, said the sale was part of its plan to focus on growth in its affinity arm, Junction, which it intended to grow to £500m GWP within three years.

Mathew Donaldson, Budget group director said: "Although the retail sector was growing it was not growing at the same pace as Junction and our other units, so we took the decision to realign our growth."

The AA welcomed further consolidation of the intermediary sector. It said consolidation would put pressure on insurers to make motor premiums more competitive.

"The current motor combined ratio is between 106% and 112%, that figure is not sustainable," a spokesman said.

"Against that background any consolidation can only be good for the broker market."