ScotAm chiefs set to share pounds 14m windfall

Scottish Amicable, one of the Britain's oldest life companies, yesterday announced plans to shed its 170-year-old mutual status in favour of a two-stage process leading to a pounds 1bn stock market flotation, which could yield a multi-million pound windfall for its directors.

The move, planned to take place in three to five years, could lead to the company's seven-strong executive team receiving shares worth up to pounds 14.4m in total if new business reaches a required target.

In addition, Scottish Amicable's 2,200 staff could receive a maximum of up to pounds 23m in free shares at flotation, with the company's 1.1 million eligible policyholders receiving at least pounds 200m in bonuses.

Policyholders will also receive an initial special bonus of pounds 75m on their later with-profits policies in May if demutualisation is approved by them in March.

Payouts will be based on a combination of the length of time policies have been held by members and their value.

The plan requires pounds 350m in financial backing from Swiss Re, the reinsurance firm, aimed at bolstering Scottish Amicable's with-profits fund. In addition, Securitas Capital, the venture capital firm jointly owned by Swiss Re and Credit Suisse Group, will contribute pounds 45m to finance new business growth by ScotAm.

Swiss Re and Securitas, whose presence was described as helping instill "a more sharply profit-focused culture", will have three seats on a new board.

Sandy Stewart, chairman of Scottish Amicable, said: "These proposals are designed to create substantial added value over the medium and long term for with-profit policyholders and enable Scottish Amicable to build on its strong market position.

"We are delighted to welcome Swiss Re and Securitas as our partners and I am pleased that they will be joining our new board."

Today's decision makes Scottish Amicable the second UK life assurance group to seek a flotation, following plans announced last year by Norwich Union.

Scottish Amicable is the UK's sixth-largest mutual life assurance company, selling a whole range of life, pensions, savings and investment products.

At the end of 1995, it had total funds under management of pounds 11.6bn and total premium income for the year of pounds 1bn.

The announcement brings to an end more than a year of intense speculation about its long-term future, with several firms, including Prudential and both Dutch and German insurers being named as potential predators.

Scottish Amicable said significant opportunities existed for profitable growth in its businesses. But to take full advantage "requires access to external capital in both the short and long term".

Mr Stewart argued the group intended to hold on to its independence: "Our plans do not include being gobbled up by anybody."

Ashok Gupta, finance director at Scottish Amicable, said the demutualisation and flotation process would be in two stages. In the first stage, the business, staff and operations of the group will be transferred to a new company, Scottish Amicable Life.

This will be a wholly owned subsidiary of Scottish Amicable Holdings, a newly formed company, with 79 per cent voting rights held by a voting trust representing policyholders.

Swiss Re's backing will give a pounds 350m boost to Scottish Amicable's with- profit fund, to be managed by Scottish Amicable Life.

Start your day with The Independent, sign up for daily news emails
News
peopleJonathan Ross has got a left-field suggestion to replace Clarkson
News
Andy Davidhazy at the beginning (left) and end (right) of his hike
video
News
Pandas may be more sociable than previously thought
news
Arts and Entertainment
The teaser trailer has provoked more questions than answers
filmBut what is Bond's 'secret' that Moneypenny is talking about?
ebooks
ebooksA special investigation by Andy McSmith
Sport
Lewis Hamilton secured his second straight pole of the season
f1Vettel beats Rosberg into third after thunderstorm delays qualifying
Arts and Entertainment
Written protest: Julia Donaldson, author of The Gruffalo, has sent an open letter to the Culture Secretary
books
Sport
footballDoes Hodgson's England team have an identity yet?
Travel
travel Dreamland Margate, Britain’s oldest amusement park, is set to reopen
News
news
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Retirement Coordinator - Financial Services

Negotiable: Recruitment Genius: To provide a prompt, friendly and efficient se...

Recruitment Genius: Annuities / Pensions Administrator

Negotiable: Recruitment Genius: You will be the first point of contact for all...

Ashdown Group: HR, Payroll & Benefits Officer - Altrincham - up to £24,000.

£18000 - £24000 per annum + benefits: Ashdown Group: HR, Payroll & Benefits Of...

Ashdown Group: Learning and Development Programme Manager

£35000 - £38000 per annum + benefits : Ashdown Group: A highly successful, int...

Day In a Page

The saffron censorship that governs India: Why national pride and religious sentiment trump freedom of expression

The saffron censorship that governs India

Zareer Masani reveals why national pride and religious sentiment trump freedom of expression
Prince Charles' 'black spider' letters to be published 'within weeks'

Prince Charles' 'black spider' letters to be published 'within weeks'

Supreme Court rules Dominic Grieve's ministerial veto was invalid
Distressed Zayn Malik fans are cutting themselves - how did fandom get so dark?

How did fandom get so dark?

Grief over Zayn Malik's exit from One Direction seemed amusing until stories of mass 'cutting' emerged. Experts tell Gillian Orr the distress is real, and the girls need support
The galaxy collisions that shed light on unseen parallel Universe

The cosmic collisions that have shed light on unseen parallel Universe

Dark matter study gives scientists insight into mystery of space
The Swedes are adding a gender-neutral pronoun to their dictionary

Swedes introduce gender-neutral pronoun

Why, asks Simon Usborne, must English still struggle awkwardly with the likes of 's/he' and 'they'?
Disney's mega money-making formula: 'Human' remakes of cartoon classics are part of a lucrative, long-term creative plan

Disney's mega money-making formula

'Human' remakes of cartoon classics are part of a lucrative, long-term creative plan
Lobster has gone mainstream with supermarket bargains for £10 or less - but is it any good?

Lobster has gone mainstream

Anthea Gerrie, raised on meaty specimens from the waters around Maine, reveals how to cook up an affordable feast
Easter 2015: 14 best decorations

14 best Easter decorations

Get into the Easter spirit with our pick of accessories, ornaments and tableware
Paul Scholes column: Gareth Bale would be a perfect fit at Manchester United and could turn them into serious title contenders next season

Paul Scholes column

Gareth Bale would be a perfect fit at Manchester United and could turn them into serious title contenders next season
Inside the Kansas greenhouses where Monsanto is 'playing God' with the future of the planet

The future of GM

The greenhouses where Monsanto 'plays God' with the future of the planet
Britain's mild winters could be numbered: why global warming is leaving UK chillier

Britain's mild winters could be numbered

Gulf Stream is slowing down faster than ever, scientists say
Government gives £250,000 to Independent appeal

Government gives £250,000 to Independent appeal

Donation brings total raised by Homeless Veterans campaign to at least £1.25m
Oh dear, the most borrowed book at Bank of England library doesn't inspire confidence

The most borrowed book at Bank of England library? Oh dear

The book's fifth edition is used for Edexcel exams
Cowslips vs honeysuckle: The hunt for the UK’s favourite wildflower

Cowslips vs honeysuckle

It's the hunt for UK’s favourite wildflower
Child abuse scandal: Did a botched blackmail attempt by South African intelligence help Cyril Smith escape justice?

Did a botched blackmail attempt help Cyril Smith escape justice?

A fresh twist reveals the Liberal MP was targeted by the notorious South African intelligence agency Boss