PRUDENTIAL IS in talks with troubled mutual insurer Equitable Life and at least two other insurers about buying up books of annuities, according to this morning's papers.
The company is understood to be running a slide rule over the purchase of up to £7bn of annuities from Equitable with two other smaller deals also on the table, says the Daily Telegraph.
Prudential is likely to scrutinise the proposals in detail to ensure they meet tough criteria on acquisitions and the return they must offer.
Prudential, one of two major players in the UK's annuity market, has been actively buying books of business from other insurers.
Deals struck over the past year include the purchase of annuities from Phoenix, part of Resolution Life, and Scottish Life, now owned by Royal London. Analysts say buying Equitable's annuities would "fit with Prudential's track record".
Equitable, led by chairman Vanni Treves, has been studying strategic options for the rest of the business.
BARCLAYS IS to launch a hedge fund product for small investors, becoming the biggest British financial services firm to try to sell so-called alternative investments to the British mass market, according to the Guardian.
It has set the minimum investment at £7,000 - a level designed to appeal to ISA investors. Hedge funds have traditionally been aimed at very wealthy individuals, private banks and institutional investors.
The fundraising will be conducted over the next few weeks with a national promotional roadshow for independent financial advisers. The outcome should give an indication of retail investors' appetite for hedge funds, whose gung-ho popular image has hidden the fact that top firms have had more consistent returns than the general stock market in the past decade.
GORDON BROWN is poised to delay plans to introduce a £200m VAT bill on the insurance industry, reports the Times.
Insurers expect the Chancellor to postpone, for at least six months, proposals to impose VAT on outsourced services from January 1 next year. The move is likely to be confirmed in the Pre-Budget Report.
A Treasury spokesman admitted yesterday that the implementation date would be influenced by the responses to a consultation on the tax.
A spokeswoman for the Association of British Insurers (ABI) said that a postponement would be “good news for insurance customers”.
EUROPEAN EQUITY markets are shrinking for the first time ever, with investors increasingly forsaking stock markets in favour of the private sector, with more than €100bn (£67bn) of deals and €50bn committed to a series of huge private equity fundraisings this year, says the Scotsman.
According to Citigroup, pan-European equity markets contracted by 1.2% in 2005. In the late 1990s, these markets were expanding by 5% to 10% per year.
In recent months, up to 60% of UK merger activity has been private equity led. Citigroup says the trend is set to continue, with institutional investors keen to get exposure to the higher returns of private equity. Confidence is being created by strong markets, along with corporates willing to deal and banks happy to lend.
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