National Mutual is up for demutualisation according to City analysts, leading to the possibility of a total of £400m in windfalls for its 250,000 with-profits policyholders and members.
The pensions specialist, which distributes its products through IFAs, has publicly announced that it is reviewing the Society’s mutual status and has appointed Dresdner Kleinwort Wasserstein, law firm Lovells and actuarial advisers Tillinghast to review its mutual status and approach dozens of potential partners, both overseas and in the UK.
All National Mutual’s business is currently owned by its members. If they were to demutualise that business would then be bought by someone else. The whole of their business and all of our subsidiaries would transfer to that partner.
According to UBS Warburg investment analyst Roger Hill, companies likely to be approached by National Mutual are likely to include Britannic Assurance, Liverpool Victoria, Royal London, AMP, and Winterthur Life.
National Mutual’s managing director Gavin Hill said: “The board of a mutual has a duty to operate the business in the interests of its members and the possibility of a review of our mutual status has been discussed at regular intervals over the years.
A result of the success of our current strategy has been the rapid growth of unit linked business meaning that, over time, fewer and fewer of our customers will be members of the Society. This has been an important contributor to the decision to review our mutual status.”
According to analyst Ned Cazalet, a decision is likely to be made in June and a vote held by October.
Cazalet added that the outcome of the review was almost certainly likely to be demutualisation of the company and that the review process was just a formality. He said that because of its smallness, the company was unlikely to float and would be more likely to be bought wholesale: “It’s too small and niche to be floated. If it’s demutualised it will be somebody else buying it.” National Mutual’s group pensions business totalled £56m annualised premium income as of December 31, 2000. This is an increase of 19pc from 1999. Total assets are £4.8bn. By Siddika Khalique
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