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Tesco moves into insurance in a big way

UK supermarket giant Tesco has signed a deal with insurance giant Fortis which will see Tesco Financial providing motor and household insurance in a partnership which will last at least until 2015 and possibly beyond. While there are specific benefits for Fortis, making the group the largest insurer of UK motor vehicles with around 2.7 million customers, the benefits for Tesco are potentially enormous.

A new subsidiary called Tesco Insurance Ltd will be created with Tesco Personal Finance owning 49.9% and Fortis holding the balance of 50.1%. While each of the companies is expected to invest around £100 million into the venture, Tesco will be creating 1500 jobs at a time when unemployment is rising and job security is but a dream for many. When you consider the quality and range of products available through Fortis insurance and the customer base and visibility of Tesco, the two companies together are a formidable partnership!

It interesting to see the Tesco is more than prepared to increase its product base and service base even in these most difficult of economic times. While the company's core supermarket division has been a little disappointing of late, compared to competitors, there is no doubt that the company is well placed to benefit when the economic upturn finally arrives.

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