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Thursday, May 13, 1999 Published at 10:27 GMT 11:27 UK

Business: Your Money

Flotation rumours over Scottish Widows

Scottish Widows: If it floated policy-holders could expect £2,100 payouts on average

The mutual pensions and life insurance group Scottish Widows has not been drawn on reports that it is considering demutualisation and a flotation on the stock market.

Such a move could value the group at around £4bn ($6.48bn), which would mean average payouts of £2,100 for each of its 1.9 million policy-holders.

Scottish Widows spokesman Alan Young said: "We don't say anything about stories like this because we've had to put up with them for years, and if we got into the ins and outs of every story it would be a full time occupation."

He was responding to a report in the Independent newspaper which said the group had been working with the investment bank Morgan Stanley to evaluate its options.

[ image: Edinburgh: Scotland's finance centre and home to Scottish Widows]
Edinburgh: Scotland's finance centre and home to Scottish Widows
Scottish Widows has a strong brand name in the long-term savings market and in the past has rejected approaches from Lloyds TSB, Prudential and the Royal Bank of Scotland.

Mutual interest

Scottish Widows chairman Lawrence Urquhart told the group's annual meeting last week that the organisation would remain a mutual as long as it served policy holders' interests.

Mr Urquhart said mutuality had not been and was not a restrictive form of corporate structure.

But he went on to say: "Obviously, a company's corporate structure is a means to an end, not an end in itself."

To some commentators this appeared to leave the way open for demutualisation.

The Independent quoted an unnamed banker saying that: "Morgan Stanley has been working with the Widows board about the prospects of doing something that will introduce more capital and provide some kind of transparency and commercial discipline."

The banker told the newspaper discussions were at an early stage and decisions had yet to be taken.

Topical issue

Mutuality has become a prominent issue with a string of former building societies converting into banks and paying out sums of money to their members in the process.

Most recently the Bradford & Bingley said it would convert.

Conversion for Scottish Widows could help if it were looking to expand through acquisition. Its current structure handicaps any buy-outs.

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