Aviva seals insurance mega merger with Friends Life

Aviva sign. Anna Gowthorpe/PA Wire

Aviva sign. Anna Gowthorpe/PA Wire - Credit: PA

The insurance industry's biggest merger since 2000 was sealed today with the completion of Friends Life's £5.6 billion takeover by Aviva.

Aviva, formerly Norwich Union, Surrey Street, Norwich. Photo: Steve Adams

Aviva, formerly Norwich Union, Surrey Street, Norwich. Photo: Steve Adams - Credit: Steve Adams

Shares in the enlarged Aviva will begin trading on Monday, with the deal making it the UK's leading insurance, savings and asset management business by number of customers. The newly-created financial services business will have a combined headcount of just over 31,500.

However, Aviva has already revealed that it expects to cut 1,500 jobs, almost 5pc of its workforce, as part of its plans to make £225 million of annual savings from the deal by the end of 2017.

Aviva hopes to limit the number of redundancies through normal staff turnover and the use of existing vacancies.

Friends Life shares were suspended today, while the deal also received the approval of the Guernsey Court.

Aviva currently employs around 28,000 staff worldwide, including 12,000 in the UK and 5,000 in its UK life and pensions division. Friends Life has 3,550 UK staff, largely in offices in Bristol, Dorking, Manchester and London.

Aviva's UK staff are in York, Norwich, Sheffield and Glasgow, although there is no overlap between Friends and Aviva's general insurance arm.

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The deal with Friends Life is the biggest in the industry since the merger of CGU and Norwich Union created the company now known as Aviva in 2000.

The takeover is the first major deal by Aviva's chief executive Mark Wilson, who took the helm in January 2013.

In March Aviva, an EDP Top100 company, posted full-year profits up 6pc to £2.2 billion, after a 15pc rise in the value of new business helped offset currency and regulatory headwinds.

The insurer, which has 31 million customers in 16 countries, is two years into a recovery plan launched by Mr Wilson following a City revolt over its lacklustre performance.