Britannic to cut 200 jobs with closure of pension division

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The Independent Online

The Britannic Group, the troubled insurer that had to scrap interim dividends and bonuses this year, yesterday shut down another part of its business to conserve capital.

Closing Britannic Retirement Solutions (BRS), its pension business that specialises in annuities for smokers and people with medical conditions, will involve the loss of about 200 jobs and cause the company to take a £12m hit.

Paul Thompson, the chief executive of the group, said: "The prospective return on capital is not sufficiently attractive to justify the further deployment of capital in BRS, which would be necessary to support further sales."

It is understood Britannic did explore selling the division, which is regarded as a solid business by the group, but it was unable to find a buyer willing to pay a high enough price. Britannic would have been looking to secure about £70m for the division.

BRS, based in Redhill, Surrey, had been improving, and Britannic yesterday said it had moved into profitability ahead of schedule with a six-month operating profit of £4m, compared with a full-year loss of £7m in 2002. Sales at BRS last year more than doubled to £362.2m.

Without a buyer, Mr Thompson decided closing the business would allow shareholders to realise the profits that are embedded within the division. The company has already closed its life insurance division this year to stem the drain on its finances of writing new business. It has also recently sold its Britannic Money mortgage arm to Paragon for £19m, after spending more than £140m on acquiring the business. It is left with its asset management arm, which is the only part of the group open to new business.

Britannic has been hit hard by the decline in the equity markets, and drew close to breaching its solvency limits. Thanks to a recent pick-up in the markets, Britannic said in September that it would be able to resume dividend and bonus payments. "Britannic still has its fingers crossed on the equity markets staying up," Roman Cizdyn, an analyst at Commerzbank, said yesterday.