Friends Provident snaps up rival

Click to follow
The Independent Online
FRIENDS PROVIDENT, the mutual life insurer, is paying pounds 115m of policyholders' money to buy a smaller rival, the latest step in its bid to become one of Europe's 10 largest life insurance groups.

Friends Provident is buying NM Financial, the UK arm of National Mutual Life Association of Australasia, Australia's second-largest life insurer. It will pay a further Ir pounds 12m ( pounds 11.5m) to buy NM's Irish arm. The deal will increase its funds under management by pounds 2bn to about pounds 12bn.

The deal continues the consolidation in the life and pensions market. Earlier this year, the Dutch insurer Aegon took a 40 per cent stake in Scottish Equitable, and Britannia Life, the building society offshoot, bought Life Association of Scotland.

Lord Jenkin of Roding, the former cabinet minister who chairs Friends Provident, said the development of the European market would leave perhaps only 10 insurers able to span the entire market. Friends Provident plans to be one of the 10 via Eureko, the alliance it formed last year with insurers from the Netherlands, Denmark, Sweden and Ireland.

Lord Jenkin hinted that the growth of Eureko could ultimately lead to the demutualisation of Friends Provident. 'Our policyholders would then become shareholders in a major operation.'

Mike Doerr, managing director, later said any demutualisation would first require Eureko to become a listed company, and that was unlikely before early in the next century.

National Mutual is selling NM Financial, which is based in Portsmouth and has 700 staff, as it refocuses on opportunities in South-east Asia. It owns a leading company in Hong Kong and recently established a representative office in Beijing.

Mr Doerr said job losses were 'inevitable if we are going to achieve economies of scale'. Friends Provident intends to keep the Portsmouth office. NM's 340 sales people will be 'invited to join' a salaried sales force of 350.

Friends Provident believes the acquisition will raise its UK market share by about 1 per cent to 3.5 per cent. Early this year, it lost an important supplier when Abbey National set up its own life company.

Comments