GE Capital buys insurance firm that targets smokers

GE Capital, the US financial services giant, is paying pounds 56m to take over Stalwart Group, the insurance company specialising in home income plans and annuities for smokers and other health-impaired individuals.

The purchase - from European Acquisition Capital (EAC), Foreign & Colonial Ventures and other smaller shareholders - means Stalwart's value has risen more than threefold since 1994.

Bert Wiegman, chief executive at EAC, said yesterday: "We are delighted with this investment's performance. Not only is it a satisfying financial return for EAC, it is also an important strategic move for Stalwart which can now enjoy ready access to the capital and blue-chip parentage necessary to take it into its next stage of continued strong growth."

Since its acquisition by EAC in January 1994, the firm has increased its staff from 18 to 100. The turnaround at Stalwart, based in Dorking, Surrey, follows three years in which the company has attracted massive business inflows through its promotion of pension annuity products aimed at people such as smokers. Until recently, they were able to obtain only the same pension as their healthier counterparts, despite having a greater likelihood of dying earlier.

The company also specialises in sales of "safe" home income plans, where homeowners can obtain an income in old age in return for signing over a proportion of their home's value when they die.

Stalwart's plans, with which it has cornered 70 per cent of the market, differ from those sold in the late 1980s. Then, many lenders advanced mortgages which were invested with the aim of paying off the loan and giving borrowers an income.

The housing market's collapse, together with rising interest rates and the 1990 stock market fall, meant tens of thousands of people found themselves with huge loans they could not pay off.

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