SYDNEY, AUSTRALIA: Ensurance Ltd (ASX: ENA) announced the proposed divestment of its UK operations to ASX-listed PSC Insurance Group Ltd (ASX: PSI) has advanced to the next stage, with the execution of a binding Sale & Purchase Agreement (SPA) for the A$8.2 million transaction.

The signing of the SPA follows the non-binding agreement announced on 22 July this year and follows the successful completion of due diligence by PSC during the September quarter.

Under the terms of the SPA, PSC Insurance will pay A$6.15 million (excluding any settlement adjustments) in cash and the balance of A$2.05 million in PSC shares (to be held in escrow for a period of 12 months) for the acquisition of 100% of the issued share capital of Ensurance UK Ltd (Ensurance UK) by PSC or a related party of PSC.

The sale proceeds are intended to be used to further expand the Company’s Australian operations organically and by way of business acquisitions where suitable.

Completion remains subject to usual closing conditions, the most material of which will be approval by the Financial Conduct Authority in the UK. This is expected to take 3-6 months. The Company will keep shareholders informed on the progression of the transaction.

Ensurance also advises that, with the progression of the transaction with PSC, Tim James will step down from his position as Chief Executive Officer at Ensurance UK, having held the position for the past five years.

Under his leadership, Ensurance UK has grown to £23m Gross Written Premium (GWP), providing insurance solutions both in the UK and internationally. The Board and Senior management at ENA remain unchanged.

Ensurance CEO, Tom Kent, said the board was pleased to have finalised the binding Sale & Purchase Agreement with PSC, paving the way for the transaction to advance towards completion in 2023.

“The transaction is continuing to progress well, and we look forward to concluding the sale next year once regulatory approval is received,” he said.

“The completion of the deal will strengthen the Company’s balance sheet and position Ensurance to capitalise on the immense growth opportunities we see in the Australian market.

“Our Australian business is expanding rapidly and delivering strong results, as outlined in our September Quarterly Report, refer ASX release dated 31 October 2022” he said.

Ensurance’s business model is based on being an insurance agency which utilises underwriting agreements with leading insurers, meaning it can offer high-quality products while being nimble and opportunistic. This strategy enables it to offer much-needed insurance products, retaining a percentage of the premium but not carrying the underwriting risk.