The BHA Group Risk and Individual Protection businesses to be acquired from Bupa have established and profitable platforms. During the first six months of 2010, BHA wrote new business premiums of £20 million. This new business would have had a value of £18 million before tax if written in a Friends company.
Following this initial period, Friends existing Group Income Protection business will be integrated into the acquired group risk business to form a strong position in this market; and the acquired Individual Protection business will be integrated with the equivalent Friends businesses on a ‘best of breed’ basis.
Integration costs are expected to be approximately £3 million after tax, with the majority expected to be incurred in 2011.
In addition to the proposed acquisition of BHA, and in the context of Bupa’s general review of its distribution arrangements, Friends and Bupa have agreed to explore ways in which Friends can introduce the Bupa private medical insurance product to its distribution channels and markets and Bupa can introduce the Friends insurance products to its distribution channels and markets.
Commenting on the acquisition, Michael Biggs, chairman of Resolution, of which Friends Provident Life and Pensions is subsidiary, said: "This transaction is entirely consistent with Resolution’s strategy. Both the terms of the transaction and the synergies to be gained from it will create value for shareholders. It will also enhance Friends' proposition as a focused and disciplined writer of new business in key product areas."
Trevor Matthews, CEO of Friends, added: "This acquisition will strengthen our Group Risk business product range and improve the profitability of our Individual Protection business. The BHA management team led by Steve Payne will bring additional highly valued expertise to the Friends team.
The acquisition is subject to the approval of change in control by the FSA and the Guernsey Financial Services Commission.
