Analysts have questioned the motivation behind Standard Life’s potential acquisition of Scottish Widows
They argue time might be wrong for Standard Life to engage in another deal, as reports suggest talks with Scottish Widows will kick off this week just as Standard Life and Aberdeen shareholders have officially approved their £11bn tie-up.
Lloyds Banking Group, which owns Scottish Widows, has been close to Aberdeen since its 2013 acquisition of Scottish Widows Investment Partnership, the insurer’s fund management arm.
An analyst, who asked to remain anonymous, says the news of the Scottish Widows talks surprised commentators as the Aberdeen deal appeared to move Standard Life away from the life space.
The analyst says: “It could be Standard Life fears Scottish Widows might take back the Swip mandate Aberdeen is currently managing.”
Gbi2 managing director Graham Bentley says a deal with Scottish Widows is about asset gathering and not boosting Standard Life’s life insurance business.
He says: “The name of the game is to have assets under influence. Scottish Widows has money in funds of its own and Swip is now with Aberdeen so it seems the deal]is about pulling all that back together. You’ll see more deals like this.”
Hargreaves Lansdown senior analyst Laith Khalaf says there have been many rumours around a Scottish Widows sale in recent years and, although a deal with Standard Life might “make sense”, he doubts it will go through.
Khalaf says: “There has been no official recognition that talks are in place and the merger between Standard Life and Aberdeen is still ongoing and adding Scottish Widows would mean another big business transfer.”
Khalaf says Lloyds might not want to give up Scottish Widows as demand for auto-enrolment solutions increases.
He says: “You don’t know whether Lloyds wants to sell the business. Without Scottish Widows Lloyds wouldn’t have that presence into the workplace insurance and pension markets.
“However, part of the large Standard Life Aberdeen tie-up is ‘bigger is better’ so it would make sense if you can add another string to your bow, but that doesn’t mean the deal will happen.”