By Scott Wright
SCOTTISH Friendly has hailed a “transformational” deal to acquire a huge book of life and pensions policies from the UK operation of Canada Life.
Scotland’s last remaining mutual, established in 1862, has more than doubled assets under management to
£5 billion and boosted its headcount by 50 to handle the increase in workload the new business brings.
It now employs 170 at its headquarters on Glasgow’s Blythswood Square after upping its expertise in its risk, actuarial and IT functions in anticipation of the acquisition.
The deal brings Scottish Friendly a further 127,000 members, lifting the total to around 700,000, while assets under management have increased from £2.4bn to £5bn. That makes it the biggest deal concluded by the historic mutual yet in terms of assets, eclipsing its 2015 acquisition of Marine & General Mutual (M&GM), which doubled assets under management to £2bn.
More recently, it acquired a chunk of insurance business from Mobius Life, which saw 13,300 members and around £350m of assets switch to Scottish Friendly in 2018.
Jim Gilbraith, chief executive of Scottish Friendly, told The Herald that the scale of the deal in terms of assets
and size “does transform us quite significantly”.
The value of the acquisition was not disclosed, with Mr Galbraith noting that its ultimate value to Scottish Friendly would emerge over the next 15 years.
He said it would be “up to us” to realise as much value from the acquisition
as possible.
Asked what was attractive about the Canada Life business, Mr Gilbraith said it has allowed the mutual to build scale which he said was increasingly essential in a consolidating market. Noting that its in-house Sonata system gives it the means in house to accommodate the additional workload, he said: “It allows us to run a lot of different products on one system. We are always looking for scale.”
When asked if it would consider further acquisitions, Mr Gilbraith replied it would “certainly hope” to look at further opportunities once the Canada Life business has bedded in. “Our track record gives us confidence [to acquire].”
Mr Gilbraith said in a statement: “This is a landmark acquisition for Scottish Friendly and helps to consolidate us as a leading mutual and a significant player in UK financial services.
“It forms part of our three-pronged strategy of organic growth, business process outsourcing for partners and mergers and consolidation, delivering the strongest possible growth and customer care for our members.
“We are delighted to have completed this process and welcome transferring Canada Life customers to Scottish Friendly.”
The UK business of Canada Life launched a tender process for the book after concluding that the business was no longer core to its operations. Products being transferred to Scottish Life include endowments, whole of life policies, investment bonds, pensions and protection policies, most of which were written before 2003.
Richard Priestley, managing director and executive director of Canada Life UK, said: “This is an excellent move for both organisations, for Scottish Friendly by increasing their scale and for Canada Life to concentrate its resources around its core business strategy. Our priority in this transfer was ensuring customers receive the highest standards of care both during this transition period, and beyond. Scottish Friendly has a great reputation in this area which gives us confidence that customers will be in
good hands.”
Meanwhile, Mr Galbraith said the underlying Scottish Friendly businesses is performing well in competitive conditions, with sales running ahead of last year. Noting that the uncertainty caused by the “B-word” – Brexit – “does not help”, he said the mutual is “having to work hard to convince people that they should be saving”.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules here