2 Major British Insurers to Merge
CGU plans to acquire Norwich Union for $12 billion in stock in a deal that would form the largest insurance business in Britain and fifth-largest in Europe. The consolidation would come at the cost of 5,000 jobs, or 7% of the companies’ combined work force.
The new company, to be called CGNU, would be based in London and will be the largest provider of general insurance and the second-largest provider of life insurance in Britain. The new company would have strong positions in several European and international markets, said CGU Chief Executive Bob Scott, who is to continue in the same role at the new group.
Shareholders in both companies and British financial authorities still must approve the transaction. The partners estimate that they can save $400 million each year by consolidating various aspects of the two companies. The deal is the latest in a wave of consolidation that has swept Britain’s insurance and financial services sectors.
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