View from City Road: Ambitious CU proves the boys right

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The Independent Online
The 'boys' got it right this week, despite the scepticism of some of the top analysts about Commercial Union's ability to bid for almost the whole of Groupe Victoire, the French insurer. Market speculation said CU would bid; the analysts said it couldn't afford to.

CU has beaten off Generali, the Italian insurance giant, and our own BAT, which looked at the idea but bowed out. It has also, for the nationalistic, turned the tables on the French insurance giant UAP - a former Victoire shareholder - which recently bought a large chunk of Sun Life.

If history is any guide, running a French financial institution ought to be fraught with local difficulties. The experience of banks such as NatWest is testament to that.

But the bidder is one of the best- managed and equipped British composite insurers. If anybody can do it, CU can. And if it works, this is a gem, for opportunities to gain a substantial presence in the French market are rare.

The fit looks good, adding a sizeable life assurance company to CU's small French operation - a foothold that should reassure shareholders that the company knows what it is doing.

Insurance is an industry where British innovation is running ahead of Europe, particularly in direct telephone selling. Indeed CU has already started telesales in its own French operations and alarmed a few French insurers in the process. Sensibly financed with more than a third derived from new equity, this looks to be a good deal for CU, if an ambitious one.

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