London-based Life Company Consolidation Group has agreed to acquire Equitable Life Assurance Society, the oldest mutual life assurance company in the U.K.
Equitable Life and all of its business will be transferred to Reliance Life Ltd., a U.K. run-off manager established by LCCG. As part of the agreement, with profits policies will convert to unit-linked funds and are expected to benefit from an increase in the current 35% capital distribution to a level expected to be between 60% and 70%.
The Financial Times reported that the deal has a price tag of £1.8 billion. Established in 1762, Equitable Life came close to collapsing in 2000, since when it has ceased accepting new business and has been slowly winding itself down.
The company still has more than 300,000 policyholders and manages assets of £6.3 billion.
LCCG CEO Paul Thompson told the FT that the conversion of policyholders to unit-linked funds was key to securing the deal, as the company "wouldn't have been interested in acquiring the mutual as a mutual," given the challenges of running one down. He also said Oaktree Capital-backed LCCG would need additional capital to carry out the transaction.
The proposed transaction remains subject to member, regulatory and court approvals, and is expected to complete toward the end of 2019.