Norwich-based Aviva in advanced talks with Friends Life about a merger deal

10:12 22 November 2014


Norwich-based Aviva is in advanced talks with Friends Life about a merger deal, it was confirmed last night.

The potential combination would create the UK’s leading insurance, savings and asset management business by number of customers.

Friends said it was prepared to recommend the terms of Aviva’s offer, which values it at more than £5.5 billion, to its shareholders.

Friends Life was created in 2011 following the amalgamation of Friends Provident, the majority of Axa UK Life and Bupa Health Assurance.

The businesses were rebranded to form Friends Life Group, providing pensions, investments and insurance and retirement income products.

The group can trace its roots back to the 1800s as the Sun Life Assurance Society formed in 1810 and Friends Provident, which was formed in Yorkshire in 1832.

The company has more than five million customers, around 4,000 staff worldwide and manages funds worth in excess of £117 billion.

A combination with Aviva creates a business with 16 million UK customers.

Under the terms of the proposed offer, Friends Life shareholders would own about 26pc of the enlarged group.

The board of Friends Life said it is willing to recommend the key financial terms of the proposal to its shareholders, subject to reaching agreement on the other terms and the completion of due diligence.

The move by Aviva comes after a resurgence in its fortunes under chief executive Mark Wilson.

He took charge in January last year after the departure of predecessor Andrew Moss in the wake of a humiliating shareholder revolt over his pay and the faltering pace of the business.

Since then he has cut hundreds of jobs and has disposed of several businesses as part of his turnaround strategy.

The group, which has 31 million customers in 15 countries, recently reported a 4% rise in half-year operating profits to £1.05 billion.

In Aviva’s UK life and pensions division, the value of new business was down 21% to £177 million as Budget reforms removed the need for people to buy an annuity in order to draw their pensions.

Aviva said access to Friends Life’s strong level of cash generation was a key motivation for the deal as this should help accelerate growth of its dividend.

The company said customers in the combined group would benefit from being part of a stronger and more diversified group with a wider product range.

Aviva predicted a doubling in corporate pension assets under administration.

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  • Yep, here come some major job losses. although they will probably be told to wait until after the election, for obvious reasons.

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    John L Norton

    Saturday, November 22, 2014

  • The report states, 'The move by Aviva comes after a resurgence in its fortunes under chief executive Mark Wilson.' A resurgence for whom ? Certainly not Aviva's shareholders. This is yet another betrayal by a CE and board solely concerned about increasing their own wealth by protecting their overpaid jobs.

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    Mr Cameron Spork-Pies

    Saturday, November 22, 2014

  • Looks like Mark Wilson's last throw of the dice before he cashes in and leaves for pastures greener. Sadly more hard working folk, who have been doing their jobs and those of thier disposed of colleagues, will be unemployed also. Avivia will probally move another large chunck of business out of Norwich to abroad giving thier customers worse service, but its not all doom and gloom, if youre a shareholder you will be better off (and lets be hobest who is the most important to this company?). Its all very sad when you think about it.

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    Saturday, November 22, 2014

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