LONDON (Reuters) - Specialist insurer Life Company Consolidation Group (LCCG) is buying Britain’s oldest mutual life insurance company Equitable Life, the firms said on Friday, releasing 1.8 billion pounds ($2.4 billion) to Equitable Life policyholders.
Equitable Life, established in 1762, has more than 300,000 policyholders and manages assets of 6.3 billion pounds ($8.4 billion), but it closed to new customers in 2000 after it came close to collapse.
Its policies will transfer to LCCG’s Reliance Life subsidiary, with the deal due to complete by the end of 2019, LCCG said in a statement.
The transfer to LCCG releases 1.8 billion pounds in Equitable Life capital to its insurance customers, Equitable Life Chief Executive Chris Wiscarson told Reuters.
“This is a wonderful windfall for Equitable Life policyholders,” said Danny Cox, financial planner at funds supermarket Hargreaves Lansdown.
Reliance Life specialises in life insurance businesses that are closed to new policyholders.
Specialist providers say they can run pensions and life policies at a lower cost by using economies of scale, investing more astutely and using actuarial expertise to match assets more closely to liabilities, thereby reducing risk.
Standard Life Aberdeen sold its insurance business this year to closed-life specialist Phoenix for 3.24 billion pounds.
“A lot of the really big players are pulling out, so I think there is a lot of mileage in it yet,” LCCG Chief Executive Paul Thompson told Reuters, adding the firm was planning more acquisitions.
LCCG, which bought its first UK life business last year, has operations in Britain, Ireland and the Isle of Man and policyholder assets of more than 30 billion pounds.
It is backed by funds managed by Oaktree Capital Management.
Equitable Life was advised by Goldman Sachs.
Reporting by Carolyn Cohn; Editing by Elaine Hardcastle and Edmund Blair