Tesco Personal Finance (TPF) and Fortis UK today announced that they are in exclusive discussions to form a new partnership to provide motor and household insurance. The deal, agreed in principle, will mean that customers will benefit from the combined capabilities of both parties. Tesco will take greater control of pricing and the development of new products, while Fortis will bring considerable expertise on underwriting and claims management. Jointly, the companies will create around 1500 new UK jobs.

Final binding terms are expected to be agreed in the next two months and the deal will be subject to normal regulatory and governance approvals.

Announcing the partnership Tesco PLC Director and CEO of Retailing Services, Andrew Higginson, said: "This is an important strategic move in the development of Tesco Personal Finance under Tesco's sole ownership. General insurance is a key area for TPF and this partnership with Fortis will enable us to take it to the next level. I am delighted to be working with them at this exciting time for our business."

Benny Higgins, Chief Executive of Tesco Personal Finance added: "Tesco already has a successful insurance business with a track record for keen pricing and great service. This new partnership with Fortis will provide us with the flexibility to build on this success and grow the business further by providing customers' with innovative new products and great value." Barry Smith, Chief Executive of Fortis UK said:

"We are delighted to be working with Tesco Personal Finance on this significant new insurance partnership. Our unique competitive proposition of high customer service delivered at low cost will go a long way to winning this important deal." The partnership involves over £ 500 million (EUR 584 million) in annualised total Gross Written Premium (GWP) and is expected to grow. It could be underwriting new business and renewals from the second half of next year through a newly formed entity.

Fortis (Insurance UK) is a leading provider of award-winning personal and commercial lines insurance solutions in the UK. Fortis UK has two main divisions, manufacturing both non-life and life products, which are distributed through a range of channels including brokers, IFAs, intermediaries, affinity partners and the Internet, as well as various wholly or partially-owned companies (RIAS, Fortis Insurance Solutions, Affinity Solutions, Text2Insure and InsureTECH Systems).

Insuring around 7 million customers and working with a range of partners, Fortis is recognised for delivering consistent and high-quality customer experiences. It employs almost 3,000 people with a head office based in Eastleigh and others in Belfast, Bournemouth, Gloucester, Haywards Heath, London, Redditch, Reigate and Stoke-on-Trent. In 2008, its non-life profit before tax and interest was £ 76 million and its non-life GWP was £ 760 million. Fortis launched a life and protection business in July 2008.

Fortis (Insurance UK) is part of Fortis, a global insurance group of significant scale with over EUR 14 billion turnover, 20 million customers and 10,000 employees worldwide.

Fortis holding (Fortis SA/NV and Fortis N.V.) consists of (1) a 75% ownership of AG Insurance, (2) Fortis Insurance International, (3) a 45% stake in Royal Park Investments - a structured credit portfolio entity - and (4) financial assets and liabilities of various financing vehicles. AG Insurance is overall market leader and a leading player in the Employee Benefits market. The international insurance activities (Fortis Insurance International) are located in the UK, where Fortis is the third largest player in the market for private car insurance, France, Hong Kong, Luxembourg (Non-Life), Germany, Turkey, Russia, Ukraine and joint ventures in Luxembourg (Life), Portugal, with Millenniumbcp Fortis being a clear market leader, China, Malaysia, India and Thailand. Fortis currently employs over 10,000 people.

Tesco Personal Finance is the UK's largest supermarket bank. Since launch in 1997, it has grown to have nearly six million customer accounts across 28 financial products and services.

Its principal activities are: general insurance - motor, home, pet and travel; credit cards and personal loans; personal savings; Tesco Compare and a network of cash machines (ATMs).

It sells products through multiple channels including in-store, by telephone and online.

Scottish HQ by moving to a new building in Edinburgh's Haymarket Yards.

Tesco Personal Finance is now fully-owned by Tesco plc following the acquisition announced on 28th July 2008 and completed on 19th December 2008.

Tesco:

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