UK-based insurer Aviva is in talks to buy Friends Life for around EUR5.6bn ($8.8bn), which allows the company to expand insurance, savings and asset management business.
As per terms of the possible offer, Aviva will acquire the entire ordinary share capital of Friends Life on the basis of an exchange ratio of 0.74 Aviva ordinary shares for each Friends Life ordinary share.
Aviva noted that the combination would create the leading insurance and savings business in the UK with 16 million customers.
Friends Life’s five million customers will benefit from Aviva’s product offer in general insurance, health, and asset management as well as life insurance, in line with Aviva’s true customer composite strategy.
Specifically, the transaction will allow Aviva to double its corporate pension assets under administration and create new opportunities by serving Friends Life’s £2bn of annual pension vestings.
The possible offer comes at a time when the British insurer announced that it would compensate around 250 annuity customers who were sold inappropriate pensions by its staff in 2013.
In an emailed statement to Reuters, the company said: "As soon as we identified this we put measures in place to address the matter.
Aviva would ensure the customers affected would be "put in the same financial position as they should have been, had the error not occurred.
"The amounts of redress are relatively small."
Friends Life was founded as Resolution Limited by entrepreneur Clive Cowdery in 2008, and changed its name to Friends Life Group in May 2014.
Image: St. Helen’s, Aviva’s world headquarters in London. Photo: courtesy of Colin.