Peter Wood, the serial insurance entrepreneur, yesterday launched his fourth motor insurance company in the UK, and his second in partnership with HBOS, to tap in to the higher risk car market.
Mr Wood, who made millions from Direct Line, the insurer he founded in 1985, announced that HBOS was backing a second insurance venture with an investment of more than £50m.
In 200, HBOS invested £150m to help launch esure, an online insurer to rival Direct Line.
Mr Wood's new business, code-named Spectrum, will concentrate on providing motor insurance to the "non-standard" market, such as sports cars and small commercial fleets, which are deemed higher risk and demand higher premiums. This sector accounts for around 40 per cent of the personal motor insurance market.
Spectrum will, like esure, use the internet as its primary sales channel and will share esure's infrastructure to keep set-up costs to a minimum. The new business will create hundreds of jobs in the Reigate and Manchester areas, where esure currently operates.
Mr Wood will be the new company's executive chairman, but will continue to run esure. Colin Batabyal, an esure director, will be chief executive. Esure, which only insures drivers who have four years of no claims bonuses, has 600,000 customers.
HBOS, as a majority shareholder, has the option to float or buy up the rest of the business after four years.
Direct Line revolutionised the insurance market by cutting out brokers and selling direct to customers over the telephone. Royal Bank of Scotland, which backed the start-up, bought Mr Wood out of his management contract in 1994 for about £30m, after his performance-related salary peaked at £18m.
He then set up Privilege Insurance in 1996, with the help of RBS, before selling his stake for around £10m in 1998.Reuse content