Investment Week understands United Assurance may bid for Britannia Life, the life company arm of ...
Investment Week understands United Assurance may bid for Britannia Life, the life company arm of Britannia Building Society in a deal that would include Britannia Asset Management, writes James Thorneley.
Such a deal would give United additional life and pensions distribution, but the strength of Britannia Asset Management would provide it with access to the IFA market.
It would also allow United to grow its presence as a third-party fund manager because while it has good investment performance it lacks credibility for historical reasons, particularly among the pensions investment consultants.
Britannia Asset Management has had an excellent reputation in the past three years under chief executive Danny O'Neill and such a deal would give it access to wider funds under management. Among the areas Britannia is well known for is its UK and US fund performance. The group has a range of 11 retail unit trusts covering the world's major equity and bond markets.
Ironically, one of the main drivers for a deal, United's director John McLachlan, who is also the group's investment director, is to retire aged 56 at the end of August. Investment Week understands he has been promoting a deal with Britannia, particularly because of Britannia's investment strength and his retirement is seen as a signal that a deal is close. McLachlan will be replaced with an interim investment director.
United Assurance has traditionally aimed its business at the lower end of the market but wants to grow its distribution and has signalled its intention to expand by recently linking up with Churchill Insurance.
It has agreed in principle to outsource its general insurance business to Churchill Insurance with effect from 1 September 1999. In February United advised that it would cease underwriting general insurance, but intended to continue selling general insurance and non-life products and that a project was underway to establish the most cost-effective means of delivering this.
Under the proposed arrangement, Churchill Insurance will provide a range of home buildings and content policies that will be sold under the United Friendly brand.
At the time Alan Frost, group chief executive at United,
said: "The arrangement with Churchill will provide the framework for our general insurance business to develop and grow. Our customers can expect to benefits from Churchill's wider range of products and support services."
On the subject of the recent speculation both groups denied there were or had been talks. Peter Reid, director at Britannia Asset Management, put rumours of a deal down to "pure market speculation". United Assurance said there was no element of truth in the speculation.
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