Towergate Insurance today confirmed the sale of Towergate Financial to Palatine Private Equity, subject to regulatory approval. Towergate said the sale, which is worth £8.64m, could have been completed in Q4 of 2014 but was put on hold due to group restructuring. Towergate now expects the sale to be completed on or around 20 March.
In December, Towergate's insurance broker division reported an 18% drop in earnings for the first nine months of 2014, while Paymentshield, also part of Towergate, reported negative results with a 12% fall in income.
Towergate also revealed last month that they could have to pay up to £85m in redress costs over the mis-selling of financial products. Towergate Financial was reportedly in talks with the Financial Conduct Authority over sales of Enhanced Transfer Values and Unregulated Collective Investment Schemes in May 2014.
Given the ongoing investigation by the Financial Conduct Authority, the Group has said it was determined that it should seek to 'de-risk itself from any future potential issues that might arise'. Under the terms of the agreement all risk on all business written post completion of the sale will be removed.
Scott Egan, interim CEO of Towergate, said:
"The sale of TFG is further evidence of a commitment to our core strategic focus, which is to build on our market-leading positions and distribution capabilities in SME insurance and specialist personal lines.
"The provision of independent financial and mortgage advice sits outside these markets and has now found a more fitting home with Palatine Private equity.
"We look forward to an ongoing and mutually beneficial relationship with the business post sale, as a distributor of complementary products and advice. Towergate Group is absolutely focused on the opportunities as we continue to revitalise the Group. This action further illustrates the momentum Towergate has gathered following its proposed restructuring."
