UK insurers agree on merger

Insurance companies Friends Provident and Resolution have agreed to join forces after unveiling the terms of an £8.6bn (€12bn) merger today.

The pair said Friends Financial Group, as the combined business will be known, will be a “significantnew force” in the UK life and pensions market.

Resolution is the UK’s biggest manager of closed life insurance funds, while Friends Provident sells life protection, income protection, pensions and investment products for individuals and companies throughout the UK.

The tie-up is expected to generate at least £100m (€149m) a year in cost savings, but a spokesman for Resolution said there were unlikely to be major job losses as a result.

Resolution employs around 3,500 people, although some 2,000 staff, mainly from customer services and IT departments, based in Glasgow and Birmingham, are already due to transfer to outsourcing group Capita from next month.

Friends Provident, which dates back to 1832, has around 2.5 million life and pensions policyholders, served by some 5,000 staff.

Resolution is the largest manager of in-force UK life funds, with an estimated seven million customers and invested assets of more than £61bn (€91bn). Some of the life companies owned by Resolution include Phoenix Life Assurance, Scottish Mutual Assurance and Scottish Provident.

Today’s statement comes two days after the two companies confirmed they were in talks about a potential merger.

They pointed out today that the new group would be well placed to participate in further consolidation in the UK life and pensions sector.

However, analysts have speculated that rival firms could attempt to disrupt the tie-up by tabling higher bids. Standard Life and Axa have been mentioned as possible bidders for Friends.