Just Retirement and Partnership, the two insurers whose share prices were savaged by Chancellor George Osborne’s radical annuities overhaul, are to merge.
The deal, announced last week on the London Stock Exchange, is expected to result in Just Retirement shareholders owning roughly 60 per cent of the combined business, with Partnership shareholders controlling the remaining 40 per cent.
The merger will value Partnership at around £668.5m.
Partnership chief executive Steve Groves will step down on completion of the deal, with Just Retirement CEO Rodney Cook set to take overall control of the combined businesses.
Just Retirement says the perceived benefits are strategic and financial and it cites five key strategic advantages.
First, it says the combined group’s larger capital base will allow it to take on more defined benefit de-risking business.
Second, the merger will “strengthen the competitive position” of the combined businesses relative to the more established UK insurers.
Third, the merger is expected to accelerate product development as expertise and management teams are combined.
Fourth, combining the firms’ mortality data and underwriting experience “will facilitate improved risk selection and greater reserving accuracy”. Essentially, this means it will be able to price products and allocate capital more effectively.
Finally, the “streamlining” of sales functions should lead to more efficient distribution.