Abbey has sold its life business to Resolution for £3.6bn.
The sale, announced this morning, represents 97% of the embedded value of the businesses being sold as reported by Abbey at 31 December 2005.
Scottish Mutual Assurance, Scottish Provident, and Abbey National Life will all transfer ownership to Resolution, as well as the group’s two offshore life companies, Scottish Mutual International and Scottish Provident International Life Assurance.
But Abbey will retain all of its branch based investment and asset management business, including James Hay, its self-invested personal pension company, and its wrap business.
Resolution says it intends to provide further investment in e-commerce products and service in particular, while also promising the branding of the Scottish Provident range will remain unchanged. And sales contact through the Abbey for Intermediaries salesforce has also been safeguarded.
Resolution plans to set up a dedicated New Life Business division which will be distinct from its in-force fund operations. Initially this will be headed by Gavin Stewart on an interim basis in addition to his current responsibilities as chief executive of Resolution Asset Management.
It has also promised the deal will not cause any disruption to intermediaries, with service levels and teams remaining unchanged and terms and conditions to remain the same.
Resolution has also stated its intention to provide future investment in the business and commited itself to further growth in the IFA market.
Meanwhile, Abbey has entered into two distribution agreements with Resolution under which it will distribute through its retail network Abbey-branded life and pensions products provided by Resolution and the provider will also continue to be the exclusive distributor of Scottish Provident protection products to intermediaries.
The bank has also secured exclusive access to provide retail banking products to Resolution’s estimated five million policyholders.
It is thought some 2,000 Abbey employees will transfer to Resolution as part of the deal, while Resolution will continue life operations from the existing Abbey premises in Glasgow as well as maintain operations in Dublin and the Isle of Man.
Francisco Gómez-Roldán, Abbey’s chief executive, claimed the deal was good for both employees and customers.
“We have sold our life businesses for an excellent price and ensured continuity of service and product. We have also secured a competitive distribution agreement for our retail bank and retained our fast-growing branch-based asset management business. In addition, this deal opens up an exciting opportunity for Abbey to distribute banking products to Resolution’s customer base.”
“We believe Resolution has the expertise, strength and focus to manage the life businesses going forward and this deal provides a clean exit for Abbey allowing us to focus on building our banking business in the UK,” he adds.
Completion of the deal is expected to take place in September and is conditional upon approval from the Financial Services Authority and relevant overseas regulators, as well as the approval of Resolution’s shareholders.
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Matthew West on 020 7484 9893 or email [email protected].IFAonline
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