The move follows Prudential's decision earlier this year to stop selling general insurance through brokers. Prudential suffered heavy losses on this portfolio, which largely consisted of the insurance of small businesses.
Prudential is now shedding the smaller but similar block of business that it sold through its field force to shop-keepers and small firms. Existing commercial policyholders whose policies come up for renewal after next April will be urged to switch to Provincial.
Prudential will receive a commission on insurance taken out with Provincial. Apart from this, the Pru will not receive any money from the deal with Provincial. The closure of the general insurance broker business, which had an annual premium income of about pounds 225m, cost the group pounds 53m.
The commercial insurance sold through the field staff this year will amount to pounds 70m of premium income from 190,000 policies. The group felt this business did not fit with the rest of its product range.
Prudential intends to continue to offer home and motor insurance to its personal customers since it regards this as an integral (and profitable) part of its home service operation. The 2 million customers who have such policies are unaffected.
Provincial, which is based in Kendal in the Lake District, is the 12th-largest general insurer in the UK, with premium income of pounds 331m last year.
Michael Hart, its managing director, said: 'A substantial part of our business is already conducted in this type of insurance and we will be able to provide an excellent service to these policyholders long into the future.'
Prudential shares closed down 11p at 281p, hit by a downgrading by Credit Lyonnais Laing.Reuse content