Woolwich approach to ScotAm rebuffed

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The Independent Online
Woolwich Building Society made an unsuccessful bid to entice Scottish Amicable, the large mutual insurer, into takeover talks, it emerged yesterday.

The offer came shortly afterWoolwich, the UK's third-largest building society, announced plans for its own pounds 3bn stock market flotation in January.

But the proposal was rejected by ScotAm, which said at the time it saw no useful advantage in surrendering its mutuality to a building society.

Woolwich Building Society yesterday denied that it had tabled a formal bid for the Glasgow-based insurer: "There has been no approach made by the Woolwich to Scottish Amicable or to Scottish Agreeable, for that matter," a spokesman said.

However, other industry sources claimed the building society had approached several insurers, including Scottish Provident, NPI and Friends Provident, in the past few months.

NPI has strongly denied it is about to be taken over. Sources at Scottish Provident said it too was opposed to de-mutualisation - but if a predator were to make an exceptionally high bid, the company would be duty-bound to consider it.

Details of Woolwich's approaches support suggestions by some analysts that the society is acutely conscious of its need to build itself up as a financial institution even before its flotation takes place next year.

In January, the society, which was recently rocked by the sudden resignation of its chief executive Peter Robinson over allegations of financial irregularities which he denies, said it was under no pressure to seek further acquisitions before de-mutualisation.

The approach also highlights the growing uncertainty surrounding the future of the UK's top mutual insurers, several of which are known to be up for sale in the wake of the de-mutualisation fever gripping building societies.

A report by Bacon & Woodrow, independent actuaries, forecast a year ago that only half the 100 or so insurance companies now in existence would survive beyond five years.

Last year, Norwich Union announced that it is considering a pounds 1.7bn flotation later this year. General Accident, the Scottish composite, took over Provident Mutual last year.

Even Standard Life, the largest mutual insurer in Europe, admitted that the job description of one of its senior executives included investigating a possible flotation or even the takeover of a building society.

Most recently, Friends Provident, which has about pounds 15bn under management, has been singled out as a likely takeover target for Sun Alliance and Abbey National.

Prudential was also said on Monday to have thrown its hat in the ring for Friends Provident. But a senior industry source claimed yesterday the announcement of Prudential's interest may have been aimed at forcing one of the rival bidders to speed up its own talks.

"The problem now is that there are a lot of smokescreens being thrown up," another insurance analyst said. "It could be that a signal is being sent to Sun Alliance to negotiate more seriously for Friends Provident.

"Alternatively, the aim could be that of using Pru's interest as a way of flushing out other companies it might really be more interested in." Scottish Widows, an Edinburgh life company with more than pounds 22bn under management, was named as a more likely target.

Comment, page 19


Mutuals for possible acquisition/flotation

Life Funds under

insurer management

Scottish Widows pounds 22.6bn

Scottish Amicable pounds 14bn

Friends Provident pounds 15bn

National Provident

Institution pounds 8bn

Norwich Union pounds 30bn

Scottish Provident pounds 5bn

Scottish Life pounds 4.5bn