Merge of the large insurance companies
As has reported Reuter, the British insurance companies Sun Alliance and Royal Insurance declared the future merge. Transaction cost is estimated in 6 mlrd pounds sterling ($9,1 mlrd). Experts expect that this merge can become the first among events which will lead to structural shifts in the British insurance market.
As a result of association Sun Alliance and Royal Insurance the company which will sharply rise in tables of ranks of leading insurance firms of Europe is formed and will come nearer to such giants, as Allianz (Germany), Generali (Italy) and Zurich (Switzerland). Incorporated company Royal Sun Alliance will have valovyj the revenue in 9,4 mlrd pounds (more than $14 mlrd). It will outstrip on a turn of leading British insurer Commercial Union and becomes the insurance organisation largest in the country offering various kinds of insurance (memory and brave).
Negotiations of two companies about possible merge have begun in the end of the last year. However, hearings that Sun Alliance is going to get other firm - fund of a mutual insurance of life Friends Provident simultaneously went. However now, after the announcement of association with Royal, the transaction with Friends Provident is improbable. Nevertheless in the market there were messages on possible new merges, and share prices of the insurance companies at a stock exchange have started to grow. Share price Royal at the London stock exchange has grown on 67 pence and has made 437 pence for the action, and share price Sun Alliance has risen on 55 pence - to 414 pence for the action.
technically the transaction on association of the insurance companies will pass as follows. Their holders will receive for each 1000 actions Royal Insurance on 1067 actions of the incorporated company. Shareholders Sun Alliance will change the actions for actions of new firm from calculation 1:1.
According to terms of transaction Roger Taylor, chief executive Sun Alliance, becomes executive vitse - the chairman of the new company. Richard Gembler, chief executive Royal, will keep the post, but will submit to Taylor. Sir Christopher Benson, chairman of the board Sun Alliance, becomes the chairman of the board of the incorporated company.
It is expected that considerable reduction of production costs - by some estimations, on 175 million pounds a year becomes a consequence of association of the companies. Besides, all converge that at the new company will be more possibilities for conducting price war in the national insurance market, and also for more active development of the foreign markets.
is at merge of the insurance companies and one unpleasant consequence: Reduction about 5000 workplaces (basically it will concern Great Britain) is supposed. Trade unions have already flayed the merge plan. Alan Pajper, the assistant to the secretary general of trade union of financial employees - the union which represents interests of 800 employees Sun Alliance, - has declared: “ the Incorporated company will cut down expenses and will receive the raised profits, and will pay for it the personnel “.
DEPARTMENT of the FINANCE