UK-based mutual life and pensions company Royal London has announced that 95% of its members have approved the acquisition of Co-operative Insurance Society (CIS), the life insurance business of the Co-operative Banking Group.
Members also endorsed the acquisition of Co-operative’s asset management business, TCAM.
Pending receipt of concerned regulatory agencies including the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA), the transaction is believed to conclude in late summer of 2013.
Royal London chairman Tim Melville-Ross said, "The acquisition increases our scale, capabilities, profitability and financial strength."
The deal is worth £219m, of which £180m will be payable on fulfillment of certain conditions, particularly when assets of the same value within CIS become available to the acquirer.
Assisting the acquirer to emerge as a substantial player in the UK life and pensions market, the acquisition will increase Royal London’s funds under management from nearly £50bn to almost £70bn, while its customer base will increase from 4 million to 6 million.
The two acquired entities CIS and TCAM will be initially held as subsidiaries by the acquirer and the CIS Long Term Business Fund will be maintained, which is expected to be transferred into Royal London in future.
After completion of the proposed transaction, the mutual life firm will deliver policy administration services, asset management services and governance under an agreed expenses arrangement with the CIS Fund.
As of 31 December 2012, Royal London had funds under management of £50bn and employs 2,910 staff.