Scottish Life moves to thwart carpetbaggers ahead of GE bid

Click to follow
The Independent Online

Scottish Life, the Edinburgh-based mutual, yesterday swiftly announced measures to stop carpetbaggers taking out policies in the hope of cashing in on possible windfalls.

Scottish Life, the Edinburgh-based mutual, yesterday swiftly announced measures to stop carpetbaggers taking out policies in the hope of cashing in on possible windfalls.

The move came amid reports that GE Capital - the financial services arm of the US conglomerate General Electric - was about to bid for the company. In the event of a successful bid, policyholders would be likely to receive windfalls of between £3,000 and £6,000.

Scottish Life refused to comment on whether talks had taken place with GE Capital, but industry insiders said a tie-up would make sense for both sides.

GE Capital, which was recently thwarted in its attempts to buy Scottish Provident, yesterday said it was actively looking at takeover opportunities in the mutual life insurance market. Analysts said it would have to pay between £1bn and £1.2bn for Scottish Life, which has £10bn in assets under management. Last week, Abbey National agreed to pay £1.6bn for Scottish Provident.

The speculation has led to a sharp rise in inquiries about Scottish Life's with-profits policies - the type that yield a windfall payment in the event of demutualisation. A Scottish Life spokesman said: "It would be naive to think that these people are not keen to cash in on windfalls and the level of inquiries has got to the stage of disrupting our normal business."

The measures, which were effective from Monday evening, mean that any new policyholder will not receive a windfall.

Scottish Life said that mutuality may not be the best future option. The spokesman said: "We are not intractably wedded to mutuality. There could well be situations either at the present time or going forward that would make it sensible to convert [to a public company]."

Comments