Prudential has what it takes to win over ScotAm policyholders - but watch out for rival bidders

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It would be nice to think that after The Independent's condemnation of Scottish Amicable's decision to go ahead with its two-stage flotation plans, the company finally decided to pull the plug on its ill-fated project.

Nice, but untrue. The fact is that after Abbey National's pounds 1.4bn "intervention" last week, ScotAm's refusal to contemplate the bid received more lashings than Charlton Heston during the chariot race in Ben Hur.

Yet, had the Pru not dashed ScotAm's go-it-alone dreams with its own pounds 1.9bn offer, there was every sign that its directors intended to put their proposals to a ballot of all policyholders.

Had they done so, they would have been crushed by angry ScotAm members.

But hey, some things in life are worth fighting for - and a juicy pounds 14.4m share bonus if ScotAm's plans had been given the go-ahead was definitely one of them.

Now that all this has been kicked into touch, where does this leave 1.1 million ScotAm policyholders?

At the moment, Prudential appears to be ahead in the bidding war.

This is because, despite the fact that the company's shareholders might pick up ScotAm on the cheap, the Pru has found a clever way of unlocking more of the firm's value and passing it back to policyholders.

The next two weeks will be interesting. There is a serious chance that other bidders may enter the race for ScotAm.

Not all their offers will look the same. In essence, however, they will have to improve on the Pru's combination of pounds 400m in cash or shares plus pounds 400m in annual and terminal bonuses to policies.

As events unfold, we will do our best in these pages to explain what is happening and what the best choices are.

What this also raises is another issue, that of how mutual insurers survive in today's far more hostile climate.

Many are far too small to float - even ScotAm wanted a period of several years while it went on a steroid-like race for growth. Even so, as Prudential's bid shows, there are ways of unlocking more of the benefits of life funds, hitherto untouchable, for policyholders.

What it requires, however, is for strong companies, with very large life funds of their own, to assist in the takeover.

In short, prepare for a wave of mutual insurance company takeovers from some of their bigger, already quoted brethren.

This column is the first to appear in its present guise. No longer in "fear of finance", we hope instead to lead you into a calmer world, where making decisions about your money should no longer inspire irrational terror.

We have signed up two excellent columnists, Brian Tora, of the stockbroking firm Greig Middleton, and John Whiting, a tax expert at Price Waterhouse. Welcome to them both.

We want this section to reflect you and your needs. So, if you have any queries, suggestions to make about issues you want to see covered, or you want to get something off your chest, write to us.

Another of the important changes we hope to make is to begin a series based on your needs.

We want readers - rich or poor, single or married, young or old - who believe their finances are in a bit of a mess and could do with some help, to contact us.

Your case will be assigned to one of a panel of independent financial advisers who will prepare a report outlining how to resolve any problems you may have.

Normally, a financial makeover might cost hundreds of pounds. From us, it's free.

All we ask is that you be prepared to allow us to write about your case and be pictured in The Independent. You even get to say what you thought of the advice.

If you are interested, please write to me: Nic Cicutti, "Financial Advice Offer", The Independent, 1 Canada Square, Canary Wharf, London, E14 5DL.

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