View more on these topics

GE motors on into pensions as NatMut is scrapped

National Mutual is to disappear from the IFA market, having been swallowed up by new owner GE Capital, the financial subsidiary of the biggest company in the world.

Only seven months after the deal was announced, National Mutual is vanishing and an enlarged GE Life takes over from April. The result is a business specialising in advicedriven pension and retirement products.

For a company with a market capitalisation of £277bn and 313,000 employees in 100 companies to swallow a 100-year-old mutual with assets under management of £4bn is not really a surprise.

But it was initially a surprise that GE bid for NatMut in July 2001 as many thought it was too small to be of interest. After being linked with Equitable Life, Royal & Sun Alliance and Scottish Life, it seemed GE was falling foul of the old proverb, always the bridesmaid, never the bride.

GE Insurance Holding chief executive Clive Cowdery says: “People ask why we would want to buy little National Mutual. Where does it fit in the huge behemoth of GE? People do not realise this is not an isolated purchase. We are a global acquisitive player. This was a normal thing for us.”

Looking at what GE Life currently does in the UK, it starts to make a little more sense. GE Life has seven million customers in the over-50s market, selling equity-release plans, annuity products and guaranteed bonds.

It says drawdown and self-invested personal pensions have been in its sights for some time and GE has been considering growing organically in these areas. So when NatMut came up for grabs it seemed a sensible move as it has long been a specialist pension provider, operating entirely in the IFA market providing Sipps, SSASs and drawdown products.

GE Life managing director David Evans says: “GE Life was formed on a demographic focus rather than a product basis. The over-50s market is growing – around 80 per cent of wealth is sitting in this market. We want to concentrate on the advised sector, so NatMut was the ideal fit for the gaps in our portfolio.”

GE descended and started a speedy integration process, which it says NatMut found “refreshing”.

Cowdery says: “Nothing about GE is halfway. We do not like drift. The secret of our success it to never sit on the fence – are you in a market or are you out of it? Is there sustainable competitive advantage or not?

“We buy and integrate around 100 companies a year and we use the same approach whatever their size. It is about process, communications, agreeing common goals and dealing with the hard issues very quickly.

“One of the first things we said was we are not always right. You have to be open and transparent about all your strengths and weaknesses.”

GE conducted extensive research with IFAs on its brand and market position and found no desire to see the National Mutual name stay.In these volatile times, the financial power of GE was seen to outweigh any attachment to NatMut.

The combined business will be pushing developments in the annuity market and is looking at expanding its long-term care range with a product for immediate usage.

The financial strength of GE and its huge global brand would make it appear to be in the perfect position to launch into stakeholder. But GE does not like being in business where it will not make money.

Although it is keeping a keen eye on the market, the new broader-based GE Life is firmly focused on making a major play for advice-driven specialist retirement planning business.

Recommended

Aegon told to rethink accounting methods

Dutch insurance giant Aegon has been criticised by the Dutch government and told to reform the way it constructs its annual accounts.Aegon&#39s unique practice smooths its profits over 30 years, in effect, acting as a giant with-profits fund in the information it gives to investors. It has been attacked for lack of transparency.Aegon is the […]

Legal & General cuts bonuses

Legal & General has cut its annual bonus rates by up to 25 per cent on life policies and maturity payouts by more than 15 per cent. Annual bonuses on life policies are down to 1.5 per cent from 2 per cent in 2000 on the sum assured, and to 2.75 per cent from 3.50 […]

English Country Inns dines in EIS style

English Country Inns, an enterprise investment scheme (EIS) that builds restaurant-style country pubs in the south of England, is offering another share subscription.The EIS has already raised £6m under previous offers and has acquired six public houses at the cost of £3,961, 975. It is looking for further funds to buy more outlets and aims […]

Isa lolly melts away

It was not supposed to be like this. For over a decade, we have thought of the Isa season, and the Pep season before it, as the time of year that put the fun into fund marketing.The rules were simple. You spent a ton of money on advertising, direct marketing and so forth, which is […]

UK Equities: looking past short volatility

By Mark Martin, head of UK Equities, Neptune With markets facing numerous challenges this year, Neptune’s Mark Martin, manager of the UK Mid Cap Fund, and assistant manager Holly Cassell explain how they look past short-term volatility to focus on maintaining a strong long-term performance record. Read more here Important Information – for investment professionals only. […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment