The Ardonagh Group has agreed to sell Direct Group’s claims business to Davies Group.

Under the terms of the deal, Davies will pay Ardonagh a consideration of up to £36mn dependent upon performance. Ardonagh said that the proceeds of the sale will be used for “further investment” in the group.

The transaction will see Direct Group (DG)’s 360-strong claims team, led by managing director Russell Crewe, come under new ownership with immediate effect including two dedicated claims centres in Elland and Preston.

Direct Group Claims and Davies Claims Solutions combined will form one of the UK’s leading providers of end-to-end claims solutions with operating centres in the UK, Ireland and Bermuda.

Davies Group will provide claims management services to Ardonagh’s underwriting and broking businesses in a six-year agreement made as part of the deal, continuing the existing claims servicing agreement carried out by DG Claims.

Direct Group’s distribution brands Simple Landlords, Fortress and Lutine Life Assurance remain as part of Ardonagh’s Schemes and Programmes segment under the leadership of DG CEO Derek Coles.

Commenting on the deal, Ardonagh CEO David Ross said: “At the heart of The Ardonagh Group strategy is the desire to be best in class across a core portfolio of brands and businesses.

“Under the ownership of Davies Group, the DG claims operation will be completely at home within a leading claims service provider and will undoubtedly benefit from shared expertise and ambition in this specialist market."

“Today’s announcement will allow us to accelerate investment in our strategic priorities as a group and we look forward to continuing our strong relationship with DG’s claims business in the future as part Davies Group,” he added.

Meanwhile, Coles remarked: “Our claims operation has gone from strength to strength since its creation in 2007, earning a reputation for first class customer service and now delivering significant value as part of Ardonagh. I’m incredibly proud of the business we have built, and now creating this new opportunity for the claims business to thrive and prosper in future.”

“In Davies Group, we believe the team are well placed to continue growing on their success as part of a renowned specialist in the claims field, sharing the same appetite for innovation and quality.”

The divestment comes just weeks after Ardonagh struck a £165mn deal to acquire UK personal lines broker Swinton.