Liverpool Victoria, the UK's largest friendly society, unveiled plans for an aggressive expansion drive in the British general insurance market yesterday, promising to invest £150m and create 500 jobs with a view to becoming one of the UK's five largest providers by 2011.
The group, one of the few remaining mutual insurance companies, has kick-started its project by acquiring ABC Insurance Solutions, a recently formed general insurance business run by a team of former Royal Bank of Scotland executives.
John O'Rourke, the former chief operating officer of RBS Insurance - the UK's largest insurance company, whose portfolio of brands includes Direct Line and Churchill - will head the expansion, focusing primarily on the home and motor insurance markets.
Although Liverpool Victoria already has a small general insurance business - writing about £400m of home and motor cover every year - it hopes to at least triple this in five years.
The expansion is the first move made by the new chief executive Mike Rogers, who has been conducting a strategic review of the business since taking the helm four months ago.
Mr Rogers said the timing of the expansion had been driven by the fact that motor insurance premiums were reaching what most believe is the bottom of the cycle. "We looked at the market and thought this was a pretty good time to expand in this business," he said. "The events of the last week [with Norwich Union announcing an average 16 per cent rise in its motor premiums] have tended to bear that out."
The company plans to use a multi-brand strategy to expand its general insurance business, building on its existing Liverpool Victoria and Frizzell brands, but also creating new brands for different market segments. Mr Rogers said the expansion would eventually be backed up by a substantial advertising campaign, with the group hoping to increase significantly the amount of direct business it takes.
Mr Rogers said the group had no current plans to demutualise, claiming it was adequately capitalised to fund its new wave of expansion. However, he said the board would keep an open mind. "It's not untouchable, but you've got to have a reason to do it. If we find we run out of capital or can't attract the right talent, we would consider it. But these are not problems we have at the moment."
Mr O'Rourke added: "Customers are becoming increasingly sceptical of a City-oriented corporate world and there is a genuine opportunity for a mutual insurer to win customers' hearts and minds with a truly competitive offering."