Norval Bryson, Scottish Provident's deputy chief executive, said its with-profits policyholders would benefit from the profits from Prolific. He said the enlarged group would be much more efficient, though he ruled out any large-scale redundancies among Prolific's staff of more than 500.
Prolific manages about pounds 1.15bn of investors' money, nearly pounds 500m less than when it was sold to Hafnia for pounds 90.6m three years ago. However, Prolific has remained profitable and has accumulated more than pounds 20m of cash which is included in the price.
Scottish Provident intends to keep Prolific's head office in Kendal, Cumbria, and has offered a position to Jean Wood, Prolific's managing director. Scottish Provident is likely to merge Prolific's unit-linked life insurance business with its own activities, while retaining the Prolific name for its unit trust business. Prolific has built a strong reputation for investment management, though this was marred by weaker results in 1987 and 1989.
Ms Wood said: 'The deal should mean a more secure future for Prolific. Our parent's problems were not an ideal background for a financial institution. None of those problems exist with Scottish Provident.' The rating agency, Standard & Poor's, has rated Scottish Provident's claims- paying ability as excellent.
Scottish Provident, which manages pounds 3.1bn, will pay an initial pounds 75.5m and a further pounds 6.25m a year later. Completion on the deal will await Prolific's 1992 audited accounts and regulatory approval, which are expected by early March.
Mr Bryson said Scottish Provident would be looking at the position of Prolific's 30-40 tied agents. Scottish Provident gets all its business through independent financial advisers, who are also Prolific's main source of business.Reuse content