Specialist M&A firm Life Company Consolidation Group (LCCG) has acquired Reliance Mutual Insurance Society, ending 100 years of mutual ownership for the UK life insurance provider.
Reliance Mutual, a Kent-based firm with 200,000 policies and assets of £1.9 billion, will be demutualised and all of its business will be transferred to a newly formed UK life insurance company established by LCCG.
Under the proposed transaction, it is expected that Reliance Mutual’s members will receive a one-off payment dependent on policy size to compensate for loss of membership rights. Members with voting rights will also receive an additional fixed payment compensating them for the loss of their voting rights.
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Policyholders will benefit from enhanced security as a result of LCCG’s agreement to capitalise the new life company at a level which is materially in excess of Reliance Mutual’s current capital position. With-profits policyholders will also benefit from reduced exposure to ongoing operating expenses and the transfer of all liabilities relating to the Reliance pension scheme.
As part of the deal, two of Reliance’s non-executive directors will join the board of the new life company to provide continuity of oversight for all transferring policyholders.
The transaction follows a review of Reliance Mutual that started in 2015. According to the insurer, it became clear that the society faced “an increasing challenge to maintain member value whilst operating as a relatively small standalone mutual without access to the capital required to support a viable growth strategy.”
“Having reviewed our options thoroughly, we are very pleased to have reached an agreement with LCCG, who we believe will provide our members with the best value and the long term security that is increasingly difficult to provide as a mutual insurer,” said Reliance Mutual chief executive Mark Goodale.
“This deal also represents increased security to our staff and we will be able to maintain our excellent levels of customer service after the transfer,” Goodale also said, adding that the transfer of business to LCCG will not lead to a reduction of members’ benefits.
For LCCG chief executive Paul Thompson, the acquisition will enable the company “to deliver the next stage of our strategy to operate across the UK in addition to our operations in the Isle of Man and the Republic of Ireland.”
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