Extended warranty provider, The Warranty Group, has acquired 50% stake in warranty provider National Underwriting Agencies as the sector seeks to bounce back from the collapse of United Warranties earlier this year.
The Warranty Group counts Dick Smith, Dell and Acer amongst its clients and after five months of negotiations it has acquired 50% of NUA for an undisclosed sum.
NUA is based in Brisbane and has developed an extensive range of niche personal insurance products including consumer credit insurance, event ticket insurance, accidental damage insurance for various consumer products and extended warranty programs.
Its major clients include OPSM, ANZ Bank, Sydney Opera House, Showbiz International and various ticketing agencies.
Scott Grimshaw, the managing director of The Warranty Group, told SmartCompany the warranty provider had worked with NUA for a long time and so saw it as a complementary business.
“NUA is a niche operator in products that are similar to what The Warranty Group provides so we saw it as a good fit for us to get involved with them,” Grimshaw says.
“We can diversify and it will help us provide a home for smaller programs that are not economic for us to do but we can pick it up and run with them.”
Grimshaw says the warranties sector is still recovering from the collapse of major player United Warranties Group earlier this year which had “a dramatic impact on the sector“.
“It’s always bad news when a provider goes under as it provides negative sentiment with consumers but with United because of nature of the way it was operated, it was not a surprise it went under,” he says.
Grimshaw claims United operated outside the regulatory regime.
“I’m expecting over the coming year there could be a tightening up in the way warranties are provided,” he says.
Grimshaw says the Warranty Group operates under a different structure. It runs as an insurance company so it reserves and sets aside funds.
“In the unlikely event we went under all the money would be protected for consumers so their claims would still be paid,” he says.
In contrast the businesses that used United Warranties had to decide whether to fund consumers’ claims on warranties out of their own pockets.
Grimshaw says The Warranty Group is currently looking at “a couple” of further acquisitions as well.
“We will be opportunistic if something comes along we will look at it, we have plenty of capacity and we are intending to grow our business,” he says.