Eagle Star to shed 500 staff

Eagle Star, the insurance subsidiary of the tobacco giant BAT, said yesterday that it would shed 500 staff working for its life and pensions arm.

The job cuts, affecting a quarter of the 2,000 employees working for the company's life side, follow the introduction of a new computer system to handle Eagle Star's administration. Most of the job losses will be among back-room staff at the Cheltenham head office.

A spokesman said yesterday: "It's about machines replacing people. The only way to cut costs out of the system and provide better value to our clients is to use computers rather than people. We have been speaking to our staff for some time, preparing them for what we all knew was going to be happening."

The company hopes to achieve many of its cuts, due to be completed by the autumn, through a voluntary redundancy programme.

BAT's other life company subsidiary, Allied Dunbar, said yesterday it had no plans to follow suit and cut jobs at its Swindon head office.

Eagle Star's new computer system arrives as the company, the smaller of BAT's two life and pension operations, prepares to launch a new series of life and pension policies. .

In common with many insurers, Eagle Star has been affected by the downturn in sales of life and pension products over the past 18 months. Other companies have been forced to slash costs to compete within a new regime which forces them to disclose charges set on their policies.