Nationwide Building Society and insurer Legal and General have entered into a joint distribution agreement to supply life insurance and investment and pension products. Nationwide will sell Legal and General products, while the insurance company has agreed to purchase the building society's Nationwide Life and Nationwide Unit Trust Managers subsidiaries.
The sale of Nationwide’s subsidiaries is expected to complete in summer 2007, when the distribution arrangements are also expected to launch. Although the consideration will be set by the subsidiaries’ financial position at the date of completion, the current value, based on the March 2006 valuation, is GBP285 million.
Graham Beale, chief executive designate of Nationwide, commented: This arrangement will provide an excellent opportunity for our customers to choose from a broader range of competitively priced products and enjoy an enhanced service. For example, we are planning to introduce an ethical investment fund and family life insurance policies.
Tim Breedon, group chief executive at Legal and General, added that the agreement clearly supports our corporate strategy to provide access to our extensive range of value for money products and services to consumers in the UK, through the broadest possible range of distribution channels.
Legal and General will take on Nationwide Life and Nationwide Unit Trust Managers’ employees, who will continue to work from their current Swindon offices. The insurer will retain this as a strategic UK operations center for its business going forward.
Nationwide commented that its customers with existing life insurance, investment or pension policies would see no change in the short term, but some may be migrated to Legal and General’s life, portfolio management and unit trust companies in the future.