Fear for jobs In Aviva-Friends merger
19th January, 2015
Aviva's chief executive, Mark Wilson, has warned of likely job losses following the company's £5.2 billion takeover of rival firm Friends Life. As terms for the merger were finalised this week, Wilson told a conference call that he would not place an estimate on the number of positions in jeopardy as a result of the all-share deal, which is expected to incorporate approximately 6 million life insurance customers. There has, however, been speculation that up to 2,000 jobs could be axed.
The terms of the agreement will see holders of Friends Life shares receiving 0.74 new Aviva shares and a further 24.1p-per-share second interim dividend. Mr Wilson has also confirmed higher than expected annual savings projected at £225 million by 2017.
Friends Life current group chief executive, Andy Briggs, will become CEO of Aviva UK Life with Wilson remaining as CEO of the enlarged Aviva Group. Mr Briggs has claimed that the transaction will create the market leader for UK insurance, saving and asset management business by virtue of the number of customers generated.
Remarking on the marrying of the two insurance giants, he said this: "It is one of those rare transactions where the two organisations fit with surgical precision, building on each other's strengths and addressing the challenges."
The merger takes place amid a year of upheaval within the British insurance industry following the government's decision to shake-up current pension rules. These rules mean retirees will be free to draw on their pension pots, compare life insurance quotes and escape compulsory annuities without the threat of high tax penalties.