A Belgium-Dutch multinational insurer Ageas has agreed to purchase the UK operations of Groupama, the troubled French mutual, for £116m, in a move to bolster its UK operations.

Upon completion of the transaction, Ageas is likely to become the fifth-biggest non-life underwriter in the UK with a 5.2% market share.

Ageas CEO Bart Smet said the acquisition is an important next step in the execution of the Ageas Group strategy towards a well balanced portfolio in terms of Life and Non-Life business.

"Following on from the start of the partnership with Tesco Bank in 2010, and more recently the acquisition of Kwik Fit Financial Services and Castle Cover, this acquisition also reflects the multi-channel, multi-brand distribution strategy of Ageas as a group and more specifically in the UK," Smet added.

Subject to regulatory approvals, the deal is expected to complete before the end of 2012 and on completion of the transaction, GICL will become a wholly owned subsidiary of Ageas UK.

Groupama suffered huge financial losses, including lasting losses on Greek sovereign debt and stock market investments, forcing the French firm to offload some of its operations.

According to industry sources, the UK operation of Groupama employs over 600 people, but the firm declined to comment, whether it will slash workers or not.

Groupama has already disposed of its Spanish unit to Grupo Catalana Occidente and property and casualty assets of its Gan Eurocourtage brokerage business to Germany’s Allianz.