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Equitable deal boosts Clerical&#39s stakeholder

Clerical Medical is set to become a serious player in group and stakeholder pensions following Halifax&#39s deal with Equitable Life, which is worth up to £1bn.

Halifax says Clerical will remain an IFA-only office but it will take over the running of Equitable funds, almost doubling its £34bn in funds under management.

Clerical will also use Equitable&#39s admin system, which is regarded as state of the art for the low-margin stakeholder environment and hopes to take a lot of group AVC business.

The Equitable salesforce will be rebranded Halifax Equitable and will sell “a carbon copy” of the Equitable range except for with-profits and Equitable&#39s planned stakeholder pension.

It will sell a white-labelled version of Clerical&#39s individual stakeholder instead and will also sell Halifax products. It will develop its own products in the future. Equitable will still remain a mutual life insurance society.

The deal, which analysts say is very good value, comes in three parts. Halifax will pay £500m up front for the admin system, salesforce and unit-linked and non-profit business.

It will pay Equitable a further £250m if policyholders reach an agreement on guarantees. Another £250m will be available if the Halifax Equitable salesforce reaches targets in 2003 and 2004.

GE Capital is still thought to be offering a higher bid but Equitable chief executive Chris Headdon says most of the headline figure of GE&#39s £1.2bn offer comprises a loan to Equitable, making the Halifax deal more attractive.

Clerical chief executive Robert Walther will oversee the integration of Equitable into the Halifax group, with Clerical&#39s sales and marketing director John Edwards promoted to managing director.

Ned Cazalet of Cazalet Financial Consulting says: “This is a very cunning deal. The unit-linked and non-profit business accounts for £300m of the £500m which would have gone to back in to the business anyway. The rest is for fund management which Halifax will also profit from.

“Clerical now has a strong position in group pensions and stakeholder. Equitable&#39s systems were designed to work on low margins. It will get any potential group schemes switching from Equitable.”

Clerical Medical spokesman Tony Bloomer says: “This secures our position to compete in the long term and write business profitably. IFAs can feel safe about recommending Clerical because we are now a very big player. We now have a very attractive group AVC proposition.”

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