Prudential is set to hit the acquisitions trial as it bids to become the Goliath of life offices and win the battle for survival in the next millennium.
It says life offices will only survive if they become giant organisations offering a full range of financial services and products or tailor their services to become specialised niche players.
It believes the industry is set for massive consolidation as only a handful of organisations will survive at either end of the spectrum.
Analysts believe Prudential will concentrate on buying or merging with other major players such as Royal & Sun Alliance and is unlikely to be tempted to buy smaller or medium sized companies unless they can offer significant value to the business.
Prudential director Keith Bedell-Pearce says: “There is quite distinct choice between being a niche player, providing specialised financial services closely tailored to individuals.
“Or firms could become a very large player so that the economies of scale that are undoubtedly available in the UK retail financial services market can be harnessed to give competitive advantage through cost leadership.”
Cazalet Financial Consulting analyst Ned Cazalet says: “There is going to be consolidation across the industry but its unlikely Prudential will look to buy organisations worth a couple of billion as they will not really offer value to the business.
“We are likely to see more giant mergers between large organisations. Even a company like Royal & Sun Alliance could be a target.