Life assurers to join forces

NATIONAL Provident Institution and Clerical Medical are in merger talks. An announcement from the two mutual life assurance companies is due shortly, writes Chris Blackhurst.

Negotiations are understood to be at an advanced stage. Only the choice of location for a joint head office, and deciding on a new name and corporate image remain to be settled.

The combined organisation will have 60 branch offices and assets under management of pounds 11bn, making it one of the largest life assurance groups in the country.

NPI is based in Tunbridge Wells, Kent and Clerical Medical in Bristol. The choice of location for a new head office is said to be the main remaining obstacle to merger.

Both pensions companies are struggling in an industry suffering from too many players and not enough business. Uniting costly administration centres would give immediate cost savings and economies of scale.

Last July, NPI reduced terminal bonuses on all its traditional with-profits annual and single premium pension contracts by 5 per cent. The company blamed disappointing stock market performance.

Janice Holmes of NPI said there was 'nothing definite about a merger'.