Scottish Friendly, Scotland's largest financial mutual, is still on the acquisition trail after doubling its assets by swallowing the UK's oldest active registered company.
Founded in 1852 Marine General & Mutual has £1bn of assets, the same as the Glasgow society created 10 years later. It will add only 60,000 customers to Scottish Friendly's 1million, but will make the Glasgow operation employing almost 100 more efficient and create a stronger platform for future partnership or merger deals. The society said it was "planning to add some jobs" at its Bath Street office.
Fiona McBain, chief executive, said: "This announcement is a tangible outcome of our strategy to diversify and grow the Scottish Friendly group. The overall efficiency of Scottish Friendly's business has resulted in our ability to competitively tender to take over existing financial services companies and run them more effectively and more efficiently."
She added: "We are particularly proud of having secured the opportunity to double in size. The takeover of M&GM will give us additional economies of scale that can drive further efficiencies and increased value to all of our policyholders, including those transferring from M&GM."
David Gulland, chief executive of M&GM said: "We have been seeking to secure the long-term future of our customers through a transfer to another organisation. This involved a thorough process considering a number of potential operations and we were delighted to select Scottish Friendly. We were particularly impressed by the group's efficiency, customer focus and experience in this field. We welcome the fact that all M&GM policyholders will become members of Scottish Friendly as part of this deal."
M&GM began life offering policies to sailors, who paid higher premiums for being teetotal in days when alcohol was a safer drink than water. The society closed its book, which comprises largely annuities, only recently so needed an efficient administration of wind-down.
Neil Lovatt, Scottish Friendly's marketing director, said the new customers would have access to Scottish Friendly's suite of products, adding: "With fixed costs increasing, not least by regulation, the ability to spread that cost over double the size of assets makes a huge difference." He said winning out over a number of other organisations was "a vote of confidence in our back office", and the society would be targeting other books of business elsewhere. He went on: "With a successful track record of takeovers behind us, it helps us in all sorts of other areas as well, when it comes to working with other larger companies, manufacturing products for them and distributing for them."
Scottish Friendly has been in growth mode since the arrival as chief executive of Ms McBain 10 years ago. In 2006 it mopped up two mutual minnows in Manchester and Preston then unveiled a deal to take over local rival Scottish Legal Life, adding £200m to its then £500m of assets. The same year it developed an administration platform for the new breed of 'wrap' assets, winning blue-chip customers Aviva and Nucleus, and more than doubling the size of its Glasgow workforce. In 2011 that business was sold to Citi for more than £20m , with all 134 jobs guaranteed. Since then the group has built online sales as its biggest channel, tied up deals to supply protection and investment products to a raft of outlets, and launched an innovative Isa that helped more than double sales in 2013.
Following a court application yesterday, the two mutual organisations expect the transaction to complete in the second quarter of the year subject to approval from members, regulators and the High Court.
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