Deals like this are likely to become common as small and medium-sized insurance companies come under pressure in an overcrowded market. Mutual companies are under particular pressure because they have little scope to raise new money.
Scottish Equitable is the tenth largest life insurance company in the UK and has nearly pounds 6bn of funds under management. It has 600,000 policyholders, about half of whom have with-profits policies that rely for their returns on regular bonuses from investment profits. The remainder are unit-linked policies, where investors buy units in investment funds.
Scottish Equitable has grown rapidly in recent years and has a good reputation among investment advisers for strong management, well-designed products and efficient administration systems. It is a popular choice among advisers for pension plans. But its financial position has been deteriorating and it needs new capital to continuing growing.
The Dutch insurer Aegon is injecting pounds 240m into Scottish Equitable in a complex deal which involves Scottish Equitable losing its mutual status. But an important characteristic of mutuality remains because policyholders retain a say in the future running of the new company.
Their interests will be represented on the board of a trust. The trust will also protect the rights of investors in the with-profits fund. These will retain ownership of the money in this fund. It cannot touched by Aegon.
Insurance company takeovers can be controversial affairs, provoking fears among policyholders that the deals will bring greater benefit to the management of the companies involved than to investors. They may be extra suspicious when the takeover is by a foreign company.
Scottish Equitable policyholders may remember the acrimony that surrounded the takeover four years ago of London Life by AMP, the Australian mutual insurer. A group of London Life policyholders bitterly opposed the deal, alleging that the management of London Life could have secured better terms elsewhere.
In particular, these investors favoured a link with Britain's Equitable Life, which like London Life did not pay commission to brokers.
Many advisers recommended their London Life policyholders to accept the AMP offer and do not regret it. Recently there has been speculation that Equitable itself might need to seek an outside partner.
Charles Cannon, a senior consultant at the actuary William M Mercer, said: 'We talked to the Equitable and to AMP and it was clear that London Life would have had to stand on its own two feet in a deal with Equitable.
'AMP would be more likely to put money in. It is very big and very strong and had ambitions to grow in the UK. I think London Life policyholders have been well served.'
Payouts on London Life policies appear to be holding up reasonably well. Figures released this week from a survey by Money Marketing in conjunction with the actuaries Clay & Partners show that the company is among the top 10 payers on single-premium personal pension contracts over five years. London Life was merged into a larger mutual organisation.
There is a shortage of other mutual companies in the UK willing to take over their weaker brethren.
Overall, financial advisers and actuaries seem warmly disposed towards the Scottish Equitable deal, although some are keen to receive further details of measures to protect the with-profits fund before fully committing themselves.
Eddie McLaughlin, a risk management consultant with the actuaries The Wyatt Company, said it was difficult for outsiders to make a judgement on whether the pounds 240m being put into Scottish Equitable by Aegon was fair.
The figure would have been struck after a close examination of the Scottish Equitable business - not just the value of funds on the books now, but the perceived value in the future. This was affected by factors such as mortality rates among policyholders.
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