Insurer sale gets go-ahead

Some policyholders have pushed for demutualisation

Members of the mutual insurer Scottish Provident have voted through its sale to Abbey National on Thursday.

The £2.1bn deal will lead to £500 windfalls for thousands of policy holders.

And the sale leaves Standard Life as the last independent Scottish mutual.

Scottish Provident has more than 400,000 members

There is some uncertainty because Abbey National is itself the target of a hostile takeover bid from Lloyds TSB.

Scottish Provident chief executive David Woods had encouraged customers to approve the takeover.

"The board is unanimous in believing that it is the best possible deal for the members, and our research suggests that that is something the members would agree with," he said.

He said that if the Lloyds TSB bid for Abbey National got the go-ahead Scottish Provident would be one of three Scottish-based life assurance businesses within the group.

"The comments in the (Lloyds TSB) press release are very much in line with wanting to put those three businesses together with their combined strengths and create another significant Scottish-based unit," he added.

Size of policy

Scottish Provident is the latest of several insurance firms to give up its mutual status.

As compensation, all 440,000 members will receive a £500 payout.

On top of that, with-profits policy holders will also get an average of £3,500 - depending on the size of the policy and the length of time it has been held.

Like other mutual companies which have been sold or listed on the stock market, Scottish Provident hopes the sale will give it access to more money which it can invest for policyholders.

The sale to Abbey National is expected to be completed by 1 July - the same day as Scottish Life is sold to Royal London.

Scottish Provident

Founded 164 years ago

Manages assets worth £10.5bn

Employs more than 2,500 staff across Britain, Ireland, the Isle of Man, Spain and Greece

750,000 policyholders, but only 400,000 mutual members will receive windfall payments

Members of Scottish Life voted that deal through almost unanimously.

Scottish Provident was founded in 1837 and now has more than £10bn under management.

It is one of the largest companies in the market selling protection products, such as insurance against sickness.

Last spring, the company announced a review after it had been targeted by a group of disgruntled policyholders who wanted it to convert to a public limited company.

And in September, Scottish Provident announced it had agreed a deal to be bought over by Abbey National, which warned that rationalisation would lead to job cuts over the next two years.

However, Abbey is also currently the subject of a £20bn bid from Lloyds TSB.

The Department of Trade and Industry has still to make a decision on whether to give that deal the go-ahead.