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”.