Royal & SunAlliance Life has finally made a meal of fellow-life insurer Guardian Assurance after nibbling away at it for five months.
It has announced that it will buy Guardian from Guardian Royal Exchange (GRE).
Guardian's United Kingdom-based parent company originally put the business on the market in June, but withdrew it several months later saying that a number of parties had expressed interest in buying it, however none offered a price that reflected that it was "a well-run, growing and profitable business."
Back then commentators had expected Guardian's price tag was around the $300 million mark, however Royal Sun (which was the front runner in June) has picked it up for $182.5 million.
GRE said earlier, that its decision to put the business on the market was linked to the group's restructuring of its North American assets, which highlighted the non-core nature of its activities in New Zealand.
Guardian has for some time been considered a likely victim of industry rationalisation as it is one of the remaining mid-sized life offices left in New Zealand, and it has been unsuccessful in growing through acquisition. Good Returns understands Guardian came second to Royal & SunAlliance when Norwich Union and Oceanic's insurance bond businesses were sold.
Another factor in the equation is that Guardian does not yet have any unit trust products.
Royal & SunAlliance chief executive Alan Bradley says that, "based on new business premium income, this acquisition pushes Royal & SunAlliance into the number three position among life, superannuation and investment companies in New Zealand, and to the top position among composite insurers." "More importantly, from a strategic perspective this gives us the opportunity to move forward in our plan to rapidly grow our life, investment and personal financial services in this market." It would appear the main attraction of Guardian for Royal Sun is size, rather than strategic assets. Bradley says the move is timely as Royal Sun is currently combining its fire and general operations and its life, superannuation and investment operations. Also, Royal Sun has recently merged Norwich Union's life and funds management business (which it bought earlier this year) into its operations. "For Guardian staff, the organisational restructuring along with rapid business expansion, particularly in the Auckland area, will create some exciting opportunities. Regrettably, there will be a number of redundant positions as the company merges the operations of Guardian into Royal & SunAlliance," Bradley says.
Royal & SunAlliance Life has finally made a meal of fellow-life insurer Guardian Assurance after nibbling away at it for five months.